H-beam import prices still firm in SE Asia, demand weak

Offer prices of imperial-size base S275 wide-flange beams for September/October shipments from mills in east Asia including Korea and Thailand are prevailing at $880/tonne cfr Singapore. Bookings took place at around $860/t cfr earlier this month, trading sources tell Steel Business Briefing. Prices are unchanged from last month.
Current demand is very slow due to the rainy season and Ramadan. Hence, mills are unwilling to lower prices because this will not result in higher sales. European-origin beams for October shipment are offeredthis week at $865-870/t cfr Singapore.
“I expect H-beam prices to remain at $850-880/t cfr levels for one month more,” a bullish Thai trader says.
Prices could rebound to $900/t cfr thereafter because demand normally improves in the fourth quarter, he adds.
Trading sources tell SBB that Asian mills are unable to reduce export prices because raw materials and production costs remain firm. These mills are also under pressure to retain the value of their exports because the dollar has weakened against local currencies.
Prices are likely to be fairly stable for the rest of the year, a regional trader says. “I don’t think mills can press for large price hikes because of uncertainties over the global economies," he says. In fact prices may dip towards year-end because of the seasonal slow-down before the Lunar New Year holidays, he adds.

Chinese trading sources say in Vietnam that Chinese-origin 150-350mm boron-added beams are offered at $730-740/t cfr, with some deals concluded at $730/t cfr, up from $720-730/t cfr in July.



Chinese steel prices will continue to be volatile
Chinese domestic steel prices will continue to be volatile for the next few months but are unlikely to see significant price swings, the China Iron & Steel Association (CISA) predicts in its latest monthly market review. The association adds that the current domestic oversupply will offset pressure from high raw material prices and strong demand for construction steel to raise prices.
ISA foresees that demand for long steel products will remain strong for the rest of this year given the boom of affordable housing construction and water conservation projects. The flat steel market will be faced with a more competitive environment compared with the first half this year due to the slowing of the manufacturing sector, especially in areas such as shipbuilding, auto and machinery production.

The inventories of rebar and wire rod in China’s 26 major cities continued to decline in July for the fifthconsecutive month by 3% and 15% respectively month-on-month as a result of strong demand. However,the hot rolled coil and plate inventories in the 26 cities rose in July by 0.5% and 3% m-o-m.
Steel Business Briefing notes that the HRC inventories in Shanghai and Guangdong’s Lecong steelmarket have increased ever since mid-July by 60,000 t and 50,000 t respectively to the current 1.53mt and 770,000 t. Traders say poor end-user demand and new deliveries have caused market stocks to swell.
Both the rebar and HRC spot prices in Shanghai have been in a range of RMB 4,710-4,820/tonne ($737-754/t) with 17% VAT or RMB 4,026-4,120/t non-VAT since early July. Traders believe the high steel production and tight liquidity are the major factors hindering significant price increases.

Vietnamese construction steel sales up 21% m-o-m in July

Sales volume of construction long products in Vietnam in July reached 359,000 tonnes, an increase of 20.5% from the previous month but down 32.4% year-on-year, according to the Vietnam Steel Association (VSA). Production of longs in June at 308,000 t was down by 11.2% m-o-m and lower by 29.1% y-o-y.

Cumulative sales of longs during the first seven months of this year reached 2.78m t, up 3.2% compared with January-July 2010. Production rose to 2.89m t, an increase of 7.7% over the corresponding period last year.

“Steel sales slowed down in June,” VSA vice-chairman and general-secretary Dinh Huy Tam tells Steel Business Briefing with reference to sales dipping to just under 300,000 t for that month. He tells SBB that steel demand in August will be adversely affected by a slowdown in construction activity. This is due to the rainy season as well as the Hungry Ghost Festival taking place this month.

The tight monetary and fiscal policies being implemented in Vietnam to stem high inflation continues to have a negative impact on steel consumption, says Tam. Inflation during the first seven months of this year reached 14.6% and bank borrowing interest rates are prevailing at more than 20% per annum.

The VSA tracks data from its member steel mills that together contribute around 85% of Vietnam's long steel production.


Korean domestic H-beam prices firm slightly.

Korean spot market prices for H-beams produced by domestic mills have climbed to KRW 970,000r - 990,000/t ($892-910/t) for SS400 grade ‘junior’ beams this week, up by KRW 20,000-30,000/t ($18-27/t) from late July.

The climb reflects efforts by local dealers to pass on their higher input costs to end-users in tandem with rising prices from the two producers Hyundai Steel and Dongkuk Steel Mill.

In late July, Hyundai announced higher sales prices for H-beams and sections starting from 1 August of KRW 30,000-40,000/t depending on product and size, as SBB reported. With an upturn in market sentiment, spot prices for China-origin H-beams of similar size have also seen a small rise over the past two weeks of KRW 10,000-20,000/t to reach KRW 880,000-900,000/t ($809-827/t).

Buying activity among end-users remains thin for the moment, but industry sources believe H-beat prices will remain firm for the rest of this half. They cite several factors including higher input costs for mill from new electricity charges, output constraints during July-August due to summer maintenance, and expected better construction sector demand from autumn, as SBB has reported.

Meanwhile, Korea’s total H-beam output in this year’s first half stood at 1.53mt, up 4% from 1.47mt in H1 2010, according to Korea Iron & Steel Association data. Within the total, exports reached 668,200 t, up 6.1% y-o-y. But the total output for sections including angles and channels in H1 declined by 5.1% y-o-y to 2.08mt.

Source: SBB