Terminal demand declines international plate market will be depressed

The international thin-plate market continued to decline. With the increase in costs and output, as well as the decline in terminal demand, the supply pressure in the thin-plate market has increased. Coupled with a correction in the Chinese steel market last week, it remains to be seen whether global steel mills will reduce production in the coming months.

The European sheet metal market continued to decline slightly. The prices of hot coils in southern and northern Europe all dropped slightly. The ex-factory price of cold coils in southern European steel mills was 637 euros/ton, and the ex-factory price of hot-dip galvanizing in northern Europe was 703 euros/ton. At the same time, the European sheet metal market is under pressure from imports, especially imports from India and Russia, and a small amount from Turkey. In the first two months of this year, the import of HRC in Germany and Spain increased by 31.2% and 31.6% respectively year-on-year. In general, European steel demand is recovering. This can be seen from the high operating rate of flat steel products from ArcelorMittal and the increase in crude steel production. At present, the operating rate of European steel mills is about 73%. From a regional point of view, demand for German sheet metal is relatively good, but Italy’s economy is in poor condition and demand is weak.

Russia's domestic coil market is still in a correction period. After the fall of Russian squash for the first time in April this year, the volume of hot rolled coils and plates fell 8% in the beginning of May. The base price of coiled coils was about 785 USD/ton, the volume of cold coils was 943-955 USD/ton, and the plate was about 790. USD/ton. Traders expect that the prices of hot coils will continue to decline in June, down by around 2% from the previous month. From January to March this year, Russia's domestic hot and cold coils rose by about 15%-20%. It is said that due to the lack of international demand, a large number of products originally planned for export have turned to the domestic market, which is the main reason for the increase in supply and the decrease in prices. Demand for the Turkish sheet market is not bad. At present, Russia's quotation on Turkish HRC exports is up to US$725/tonne (FOB, Black Sea) and cold coils US$860-890/tonne (FOB). Turkey's domestic steel mills offer hot coils for August production. 790-800 US dollars / ton, cold roll 900 US dollars / ton, basically the same as the import price.

The price of American sheet fell slightly. Since April, the U.S. sheet price has dropped to nearly US$100/short ton. Midwestern steel coils are ex-works reference prices of US$800-820/short ton, cold coils to US$889/short ton, and hot-dip galvanized coils 931 USD/short ton. The market is expected to continue to explore the space may be small, it is said that a steel mill will be raised recently steel prices 20-40 US dollars / short ton, and other steel mills will follow suit, but this action can reverse the decline in the spot market is still to be observed.

The retreat of the US thin-plate market was also a correction of the rapid price increase since the end of last year to the first quarter of this year. On the whole, the U.S. steel industry is still better than the rest of the world. This can be seen not only from the U.S. steel production data but also from the investment plans of the steel plants. Last week, there was a noticeable decline in U.S. steel production, but the overall trend was still growing. With the recovery of demand, the capacity utilization rate of steel plants has reached 74%. Driven by market demand, some steel mills have started to formulate investment strategic plans. Rising raw material costs and squeezed profits are the main reasons for investment promotion. Nucor, Steel Dynamics, and U.S. Steel are all expected to enter or expand direct reduced iron production capacity. Since the global financial crisis in 2008, the investment of global steel mills has slowed down significantly, and the investment of US steel mills has been low in the past six months.

Flat steel prices in Asian steel mills have steadily declined. The trend of China's steel market has received attention. Faced with global inflationary pressures, government tightening policies, energy conservation and emission reductions, power cuts, and capacity release, many uncertainties remain in the thin sheet market in May, but the overall feeling is weak. The domestic demand for sheet metal in Japan has not recovered as quickly as production, especially in the automotive sector. Supply pressure has increased and prices of hot coils have fallen. As a result of the post-quake reconstruction, domestic steel demand will slowly rise. Last week, Japan’s HRC export price was raised by 8% to US$840/tonne and cold rolled to US$900/tonne. Although domestic demand for steel in India did not meet expectations in April, it was still better than in March. Some steel mills also accepted a large number of export orders. Since the end of March, the ex-works prices of Indian steel mill coils have been maintained at Rs 35,000-35500/t, approximately US$ 788-799/t. Whether steel mills can achieve price increases in May remains to be seen. The South Korean sheet metal market remained flat. After the steel prices raised by Pohang and Hyundai Steel, the actual transaction price in the HRC market remained unchanged. Users sought steel mills to give them a certain discount. Pohang's export prices for steel products in Japan have also been raised by a maximum of 15,000 yen per ton. In addition, the plate price negotiation in the second quarter of Japan and South Korea has also entered a critical stage. What price increase Hanwha board ultimately accepts is worthy of attention.

In Southeast Asia, the import market for hot coils in the region is still deserted, and the prices of cold rolled base materials from Taiwan and Korean steel mills in China are at a minimum of US$750/tonne (FOB). Buyers are still waiting to see. The credit crunch in Vietnam’s steel market and the inability to obtain letters of credit remain the key to restricting steel imports. Current Chinese-Vietnam commodity price quotes remain around US$715/tonne (CFR), and new offers are said to have increased to approximately US$740/tonne (CFR), even if no order provider is willing to reduce the offer.