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Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Jon Koplik who wrote (10116)	9/29/2008 7:45:48 AM
From: robert b furman	Respond to of 33421

Hi Jon, Don't know about hot rolled steel, but automobiles use cold rolled steel for sheet metal stampings. Bob

To: Jon Koplik who wrote (10116)	4/11/2011 12:14:51 AM
From: Jon Koplik	1 Recommendation Read Replies (1) \| Respond to of 33421

WSJ -- Steel Price Softens as Supply Solidifies .................................................. APRIL 11, 2011 Steel Price Softens as Supply Solidifies By ROBERT GUY MATTHEWS The world's steelmakers are increasing output despite softer demand, pushing down prices. In a few countries, notably Brazil and the U.S., steel prices remain high, thanks to steady demand in the former and limited output in the latter. Many U.S. plants that had shut down or pared production during the recession haven't yet gone back online fully. AK Steel Holding Corp. in February said it would increase, by $50 a short ton, prices for all of its carbon, flat-rolled steel products, a move followed by other U.S. steelmakers. But U.S. pricesespecially for hot-rolled steel, a key component used in most steel productscould be headed lower too, says Peter Marcus, economist and steel analyst for World Steel Dynamics Inc., a consulting firm. "Steel buyers in the United States are bearish on the price outlook for hot-rolled," he says. "They're now receiving offers for hot-rolled band from abroad in the $740-$800 per-net-ton range, which compares to the domestic price in the $870-$890 per-ton range." Many global steelmakers increased production in the second half as world economies strengthened. But price increases followed because of stronger demandand higher costs for raw ingredients, such as iron ore, coal and scrap across a broad spectrum of products, such as premium automotive-grade steel, pipe and tube for energy markets and plate steel for ships. The price of plate steel rose 22% in major steel-producing countries and the price for pipe and tubing rose 14% in the second half. Now, prices are falling as demand softens, in part because of unrest in the Mideast, the effects of Japan's earthquake and tsunami and relatively high supply. In China, the world's biggest steel producer and consumer, annualized steel production rose 16% to 708 million metric tons in February from November, according to the China Iron and Steel Association. Steel prices in China meanwhile have fallen around 8%-10%. "The fundamental problem the Chinese mills have faced in recent times has been strong competition among the 30-plus entities selling their products to the same customers," Mr. Marcus says. Outside China, February steel production rose to an annualized rate of 827 million metric tons, slightly higher than the peak of 811 million metric tons reached in May, according to World Steel Dynamics. Prices for key raw ingredients are falling as well. Prices for iron ore fell about 9.5% last month from February on the spot market, aided by plentiful supply. While analysts don't believe lower steel prices are part of a longer-term trend, they could continue to fall as buyers and traders wait and pit sellers against each other. Mills in Russia, India, Taiwan and parts of Europe have tried to boost prices between 2% and 7% for several types of steel, but some buyers are holding off. "It would not be prudent for us to buy more steel now if the prices are continuing to drop," says Stanislav Khazanov, steel buyer for Central Steel Co., a small Moscow-based buyer that also has operations in India and Ukraine and buys steel for use in tool making. "We have about six weeks of inventory that is sufficient. I believe prices will drop another 2%-5% in the next few weeks." Mr. Khazanov isn't alone. "There is something of an impasse in the West European market as customers prefer to sit on the sidelines rather than place business at the inflated levels being demanded by the domestic producers," according to a research note by MEPS International, a U.K.-based steel consulting firm. "Many companies have stocks that are adequate for now." Write to Robert Guy Matthews at robertguy.matthews@wsj.com Copyright 2011 Dow Jones & Company, Inc.