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The global China Galvanized Corrugated Roof Sheet products market has come back to life

Downtrend in global longs market in October against all seasonal expectations The global China Galvanized Corrugated Roof Sheet products market has come back to life at the end of October and in early November as speculative purchasing has started to be observed following the downward spiral of scrap prices seen after the last IREPAS meeting held in Rome in early October, which had made it almost impossible to sell products in the market. The market moved on a downward trend during October against all traditional seasonal expectations. Mills suffered either from high inventories of expensive raw materials or expensive long steel products. Fabricators, on the other hand, enjoyed low-priced purchases to cover their low-priced long-term project businesses. Buyers start to conclude purchases as prices stabilize It seems that buyers have started to think that the downward trend of product prices will not be back at least for a while in conjunction with a certain strengthening in scrap and billet prices, and so they consider buying as a low-risk option as prices have stabilized. Subsequently, mills have recently started to see better order books, though at very low price levels. No change in demand situation in US Demand in the US market has not shown any change and supply is still higher than demand due to both domestic production and imports. Many EAF mills in Asia halt their melting shops In Asia, many EAF mills are stopping their melting shops and instead are rolling billets supplied from China, as observed in Malaysia, Thailand, Taiwan and Hong Kong. This is creating a new balance in the scrap markets, which are now characterized by greater availability. China achieves record exports in September Despite its slightly reduced steel production, China achieved record-high exports in September. Producers are not able to cover their total costs on exports, but almost all of them are still selling for cash flow purposes or to dilute fixed costs. Almost impossible for producers to make a profit, except in US This is a period when cost does not matter. At present, there is almost no chance for producers to make a profit, except in the US where the market is very well protected and so sales prices are about $100/mt above average global export prices. Politics comes before business in most cases and therefore markets will disappear one by one and export will be very difficult even for the cheapest-cost producers. The markets are closing because of safeguard or dumping measures, on the one hand, while some producers with state backing are dumping more, on the other hand. As a result, life for producers who have no protection is getting more difficult with each passing day. Low interest from investors in steel – should help correct supply excess The financial performance of mills around the world is very poor, to say the least. Recent reports indicate negative results for many mills, also in China. Consequently, interest from investors in the steel business is at historical low levels and this should correct the excess of supply. This could be a sign that we are very close to the lower part of the current market cycle. Downtrend of ferrous scrap prices seems to have stopped The downward trend of ferrous scrap prices in the international market has stopped and prices are trying to head up or at least to stabilize. China’s output cuts still insufficient China has started reducing production since July although the output reductions have been insufficient so far. The reduction of outputs in China is expected to accelerate in the coming months. The reduction in supply is extremely important as 80 percent of what is being produced currently can be sold at higher prices … anywhere. Market suffering from massive oversupply The market is suffering from massive oversupply. Therefore, competition to sell the remaining 20 percent of output is extremely intense and will remain so until China reduces its output significantly. More and more protectionist measures expected Under current market circumstances, more protectionist measures will be announced with each month and many of these will not even allow any defense. More and more protectionist measures will cite critical circumstances for any reason. Such market protectionism will drive reductions in exports and, as a consequence, also in production. Long steel products market remains very unstable The long steel products market is very unstable currently and there are no real signs of a consistent improvement yet. The outlook is very challenging for producers with prices at low levels. Only the situation in the US market can be described as satisfactory in an otherwise unpredictable global market. How long more can producers afford to sustain losses? Most mills are selling below cost today, and so all depends how much they can afford in terms of losses, which will determine how low prices can go.

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