Real consumption of flat steel products, which has failed to recover, remains lacklustre and now scrap costs have started to slide, with two consecutive monthly drops

The recent upward price trend in the USA has not been sustained. We have noted modest price reductions for most strip mill products. A combination of factors is responsible for the deterioration. Although service centre inventories are declining, they are still above the desired level and the destocking phase persists.

Real consumption, which has failed to recover, remains lacklustre and now scrap costs have started to slide, with two consecutive monthly drops.

However, import competition continues to be low, due to the weak dollar and good demand elsewhere in the world.

These same conditions are encouraging US mills to start looking at export opportunities.
Imports are currently not a factor in the Canadian market, with lead times out to September.
In the Ontario region, producers are reporting slower demand from the auto and manufacturing sectors.

Service centre inventories are comfortable at 2 to 2.5 months supply but we have reports of falling business levels.
Order books at the mills have weakened, resulting in some discounting.

The return from the extended early May holidays has heralded a number of positive price developments in the Chinese market.

Export business continues to flourish.

It is difficult to assess how the steel export licencing system together with the export tax levy and the strengthening exchange rate between the Yuan and US dollar will affect overseas transactions in the longer term.

Many of the implications are set out in the MEPS on-line forecasts.
Japanese domestic demand, particularly from the auto and shipbuilding sectors, remains buoyant.

The export climate is also healthy.

However, total domestic inventories of strip mill products held by steelmakers and service centres, at end March, climbed 1.25% - reversing the previous month’s fall of 2.4%.

They have now moved back above the 4 million tonne level considered appropriate.
Quayside stocks lost 9.4% in the same time-frame.

South Korean sales have shown some positive movements, mainly for seasonal reasons.
In Taiwan, domestic market sentiment is quite robust at present.

Even so, the future outlook is unclear because of increasing global slab and scrap prices, together with the question mark over Chinese exports, which at the moment are adversely affecting Taiwanese sales to overseas customers.

The Polish economic situation continues to progress well, creating excellent sales opportunities for the steel mills.

In the Czech and Slovak markets prices are slightly up this month amidst good demand.
Inventories are at normal levels and supply is adequate.

No serious discussions regarding third quarter prices have taken place so far.
There is virtually no import pressure.

West European flat product prices are generally stable, whilst producers are mulling some further rises for the July/September period.

However, buyers are anticipating little change in the second half of the year.
Third country price offers continue to stay at higher levels than those quoted at the start of 2007.

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