Trouble in Steel Town as World’s Mills Face Glut, Sinking Prices

From Bloomberg, Jul 29, 2015

There’s trouble in steel town. Global finished steel prices are in retreat as China’s mills put more products on the boat for export.

The average U.S. price of hot-rolled coil, used in everything from buildings to automobiles, dropped by 33% to $456 a ton in the second quarter, according to The Steel Index.

In China, steel rebar sank to the lowest level since 2003 this month.

Scrap prices are also falling.

To read the entire article, go to http://bloom.bg/1Sf0Ypz

A few data points:

“Chinese steel is flowing into the North Asian markets,” Naoto Umehara, executive vice president of Kobe Steel Ltd., told reporters in Tokyo. “That’s pushing down hot-rolled coil, a typical example of general commercial steel products, and that’s also pushing down the overall market prices. In that sense, the damage is big.”

South Korea’s Posco, the world’s fifth-largest producer, reported a slump in profit earlier this month and announced plans to cut staff and refocus on its main business. Its stock traded this week at the lowest in a decade.

U.S. Steel said that the net loss widened to $1.79 a share in the second quarter compared with 12 cents a year earlier. Its steel SALES fell to $2.9 billion from $4.4 billion. Stock in U.S. Steel is 36% lower over the past 12 months.

DUMPING?

Steel exports from China surged 28 percent to 52.4 million tons in the first half, according to customs data. Overseas sales from China have risen to extraordinary levels, according to Credit Suisse Group AG.

All of this are more signs of a reduction in the value of scrap steel and proposed new mine and rail projects around the world.

Leave a Reply