Global steel prices starting to plateau – autumn correction probable

We are now seeing the beginning of the seasonal summer slowdown in demand in the US. In addition, those domestic producers heavily involved in the auto sector are finding it more difficult to fill their order books. The rate of steel transaction price increases has slowed considerably. Service centres are keeping inventories at historically low levels because sales activity is poor. However, foreign offers are virtually nonexistent due to the weak US dollar and better prices elsewhere. Therefore, the supply/demand balance remains tight. Several local mills have already formally announced their intention to lift transaction values by a relatively modest $US40/50 per ton for September deliveries but many market players feel prices may have already peaked.

Although Canadian steelmakers would have liked to implement further price hikes, demand has not proved strong enough to justify the attempt. Values are stable this month with the possibility that they may rise in the Autumn due to ever increasing input costs. Order intake at the mills is exibiting some seasonal softness with material still available for August delivery. However, there are no signs of growing imports. Distributors' inventories are still dropping and their shipments are reported to be running at about 7 percent behind last year….MEPS