Global steel markets oversupplied in H1 on over production: MEPS
Global steel markets continue to be oversupplied, and at the half year point, world steel output was up 7.6% on the same period 2004, UK consultancy MEPS (International) said Wednesday.
"This factor is largely the result of continued over production in Asia-mainly China. Steel supply has been reduced recently across Europe, North and South America...and is now so acute that South Korean, Japanese and Taiwanese steel makers are also cutting back in an effort to prop up prices," MEPS said. "We detect no signs that the Chinese steelmakers will bring output more in line with domestic demand in the near term. The actions in Europe and the Americas will almost certainly be offset by higher Chinese supply," said MEPS. A global steel price revival could be expected in the second quarter of 2006 if the Chinese authorities undertake more stringent fiscal measures to stifle output and reduce or eliminate export rebates.
Substantial flat-product capacity is scheduled to come on stream in the short term-adding to an already difficult situation. The oversupply situation across the globe has resulted in the MEPS World average flat product transaction price falling for four consecutive months. Appreciation of the Asian currencies could lead to a small rise in August, although further marginal decreases are likely until March 2005.
MEPS noted that the MEPS world average long products price fell once again in July, the seventh consecutive monthly decrease. "The rate of reduction has been much slower than in the flat products segment because the panic buying was less intense in 2004 in the long products" categories," the consultancy said. "We forecast further price reduction over the next few months to March 2006. Asian excess material is expected to put downward pressure on prices around the world as suppliers try to export their oversupply," MEPS concluded.
"This factor is largely the result of continued over production in Asia-mainly China. Steel supply has been reduced recently across Europe, North and South America...and is now so acute that South Korean, Japanese and Taiwanese steel makers are also cutting back in an effort to prop up prices," MEPS said. "We detect no signs that the Chinese steelmakers will bring output more in line with domestic demand in the near term. The actions in Europe and the Americas will almost certainly be offset by higher Chinese supply," said MEPS. A global steel price revival could be expected in the second quarter of 2006 if the Chinese authorities undertake more stringent fiscal measures to stifle output and reduce or eliminate export rebates.
Substantial flat-product capacity is scheduled to come on stream in the short term-adding to an already difficult situation. The oversupply situation across the globe has resulted in the MEPS World average flat product transaction price falling for four consecutive months. Appreciation of the Asian currencies could lead to a small rise in August, although further marginal decreases are likely until March 2005.
MEPS noted that the MEPS world average long products price fell once again in July, the seventh consecutive monthly decrease. "The rate of reduction has been much slower than in the flat products segment because the panic buying was less intense in 2004 in the long products" categories," the consultancy said. "We forecast further price reduction over the next few months to March 2006. Asian excess material is expected to put downward pressure on prices around the world as suppliers try to export their oversupply," MEPS concluded.