Prices may waver in 2nd half 2010, but collapse unlikely
Steel prices have risen significantly in recent weeks as producers look to pass on their actual and anticipated higher costs of raw materials. Prices are up by $20-40/tonne in the last week, and in some cases by up to $60-70/t from February.
Some buyers and traders are talking about a possible finished price collapse, given the relative fragility of demand.
Roger Manser, managing editor of Steel Business Briefing says “A price collapse is probably wishful thinking by buyers, though financing is still tight in places and there is significant overcapacity in the market. In the second half of this year, prices may wobble, but they are unlikely to dive steeply.”
Demand is currently strong in India and China, and price increases there should stick in the coming months. However, Beijing may take further cooling measures later this year and that would affect Chinese construction, which is closely correlated with Chinese steel consumption.
In North America, there has been restocking. Sheet is at around $640-680/st ($706-750/tonne); however, locals are sceptical about the sustainability of the increases in the medium term. They fear plans to bring back on line up to 8m s.t/y of idled capacity, and that this may flood the market with supply, outstripping demand.
In Europe, producers are pushing for higher prices, but are running up against slow growth. Hot strip prices are €440-480/tonne in mainland Europe and £440-450/t (€483-494/t) delivered in the UK. Rebar, the mainstay of the construction industry, is around €450-480/t ($614-655/t) del and £400/t del respectively.
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