The US flat products market was described as "steady but slow' in July. The lack of orders kept delivery lead times very short. In an attempt to halt the downward price spiral, leading mills announced hikes of $US40 per short ton on all strip mill products. Customers were reluctant to commit to the new numbers before they had time to assess the situation. Planned maintenance breaks in the second half of 2012 should help the supply/demand balance.
The Canadian mills are also trying to secure advances of a similar amount to those in the US. They are hoping this will be sufficient to stop the sharp decline seen in June. Capacity cutbacks should provide a good opportunity for the initiative to take hold. With the recent reductions in local prices, importers are not finding the market particularly attractive and volumes of foreign material are running below the levels of 2011 and early 2012.
Chinese market values continued to slide in July. Demand from end-users remains poor, despite the government's decision to cut interest rates in the hope of kick-starting the slowing growth of the economy. The export market has also been softening both in terms of price and demand, creating further pressure at home.
In Japan, domestic steel demand remains sluggish and exports could decline now that the yen has strengthened again. After making severe cuts to its flat products prices for July contracts, Tokyo Steel has recently decided that its August list, for the products monitored by MEPS, will be a rollover of the previous figures. Distributors have welcomed the move, feeling that it signals that the market has reached the bottom.
In South Korea, overall inventories of flat products continue to climb. At the end of May, they had swollen by around 19 percent, year on year, due to dull domestic demand. A number of steelmakers have started to reduce output to try to rectify the supply/demand imbalance.
There is a great deal of uncertainty in the West European flat products market. Despite price rise announcements by the leading domestic mills, customers have been unwilling to pay any more. Distributors are only buying what they need, refusing to build up their stocks. Any hikes are unlikely to be implemented until after the summer at the earliest. The mills will need to make further output reductions to achieve them