IRON ORE ROAD TO STAY
Prognosis for the third quarter of this year does not promise anything good is the world#39;s steel producers. Prices continue to fall, demand is low, and stocks products for consumers and traders reduced too slowly. Very pessimistic, in particular, set up Latin American exporters slabs. In the second quarter, they were, on the whole, to keep the cost of their products at the same level (about $ 450 per ton FOB), but in July predicting a significant drop in quarterly contracts - from 20 to 50 dollars per ton, compared with the level of the April-June. In the spot market, semi-finished products from the countries of the CIS has not traded above U.S. $ 400-420 per ton FOB in connection with a weakening market HRC further decline in June looks very likely.
Chinese slabs were delivered in late May in East Asia at the rate of not more than $ 460 per tonne C F. On the market trends sheet steel eloquently decision of the Japanese company Tokyo Steel Manufacturing reduced prices for a wide range of flat products at 5-10 thousand yen per ton (about 46-92,5 dollars) for the June deliveries. At the same time, the cost of hot-rolled coils for internal users will be reduced to about 62 thousand yen per ton (U.S. $ 574) with shipping. Prices for flat steel continued to fall throughout East Asia.
The cost of exports from the CIS countries, Taiwan and China in late May did not exceed 530-550 dollars per ton C F (HRC), competition from Japanese and European suppliers hit by the price of high-quality varieties to less than $ 600 per tonne C F. Heavy plates Korean and Japanese production is still quoted at 740-750 dollars per ton C F, but the producers of these countries have expressed growing dissatisfaction with the growth of Chinese exports. According to experts, the supply exceeds the demand is stable, and in the foreseeable future, prices will fall. More stable is the situation on the market of long products. Rebar, wire rod and long products of Russian and Ukrainian production in mid-May fell to 380-420 dollars per ton FOB, billet - to 320-330 dollars per ton FOB, but behind this reduction was suspended. Western companies are gradually prolong the current prices for the third quarter, hoping that the seasonal increase in demand for construction steel compensates for depression in the construction industry in the U.S. and Western Europe.
However, most experts expect another recession in the third quarter and believe that steelmakers need to continue to decline in production in order to reduce excess product on the market. In professional circles, continuing a lively debate about the prospects for the second half of the year. The main optimistic while playing Danny Di Micco, head of the American company Nucor, who believes that the turning point will be reached this summer due to stock-outs consumers and relatively high rates of growth of the U.S. economy.
The Russian Severstal believe that it will soon be replaced by the stabilization of the decline, and the average price level will be approximately the same as last year. At the same time, experts of British consultancy MEPS do not expect immediate future absolutely no good. According to them, the price will fall, at least until the end of the year due to weak demand in Western countries and the violation of the balance of the Chinese export market.
In the EU, growth in steel consumption will be celebrated only in the 10 new member states (and, by 4.7%), but the total demand in the EU countries, they account for less than 15%. After the May drop in world market prices of scrap metal seriously shines the June. At the auction for the sale of packaged scrapped automobiles in the United States at the end of May, it was reported decrease the level of the index AMM Factory Bundles for $ 60 per long ton (1,016 kg) - about the same as the previous month.
Thus, the value of this index, which reflects the cost of traditionally most expensive scrap dropped to $ 155 per long ton - just three months, prices have collapsed twice. Obviously, after this collapse, and the price of other varieties of scrap: demand for these raw materials in the United States are now minimal, and the yields are rising, as is usual in the warmer months. Perhaps something similar will happen in Western Europe, where there is almost a similar situation: the lack of interest in new purchases of many consumers with the inevitable expansion of the volume of deliveries. In late May, the export price of European material HMS?
1 are, however, at the level of 200-210 dollars per ton FOB, but in June, they seem to fail below 200 dollars per ton. The same applies to the same quality 3A of the CIS. So far they have been delivered to Turkey and the Mediterranean countries are at prices of about 210-225 dollars per ton C F, but keep the price of lowering in June will be very difficult, if not impossible. In Asia, the market activity is low, traders also do not show much zeal, so that prices go down slowly and are currently the highest in comparison with other regional markets.
Prices for 3A in late May reached U.S. $ 235-250 per tonne C F. However, the prospects are not encouraging and that shows the weakening of the Japanese market. Local varieties of H2 scrap in late May, has already supplied to neighboring countries at prices below $ 200 per tonne FAS. At the same time, the price of iron ore, according to many Western specialists, though reduced in 2006, but still remains high - at least to the level of the recession in 2006 is obviously not going to happen. In this regard, the leading metallurgical corporations in Western Europe and East Asia are increasingly interested in a transfer of smelting capacity in countries such as Brazil and India, where there are large reserves of iron ore and relatively developed infrastructure.
Last week it was announced the signing of a memorandum of understanding between the largest Brazilian (and the world), iron ore producer CVRD and leading Korean steelmaker Posco. Partners are going to build in Brazil smelter 7.5 million tons of slabs per year for further delivery to Korea. In addition, first emerged about another project CVRD, which refers to the capacity of smaller companies only 1.5 million tons per year. The project cost is estimated at $ 750 million, of which 10% of the Korean company is ready to invest Dongkuk Steel, claiming 50% of the production of the new plant. So far Dongkuk buys abroad more than 2.4 million tons of slabs.
Along with the Koreans, the interest in the Brazilian project exhibit and companies from Italy.
