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The TSI report has quoted a research note from Goldman Sachs’ analysts which expects little change for HR sheet for the remainder of 2012, seeing price stability around the US$640/short ton mark with possible up..

07 Dec 2012

LONDON (Commodity Online): World steel market is expected to grow in both consuming and exporting regions, positive trends have been observed recently in Asia, USA, China during the past two months, according to The Steel Index monthly report on steel.

The TSI report has quoted a research note from Goldman Sachs’ analysts which expects little change for HR sheet for the remainder of 2012, seeing price stability around the US$640/short ton mark with possible upside to the price in early Q1.

They do expect some weakness in pricing thereafter which may be spurred on by poor demand in Europe or Asia. Delivery lead-times remain sufficiently short for buyers to “top-up” additional tons with-out looking to the import market for volumes. Spreads between HR coil exports from China (synthetic CFR Gulf) and the domestic US Midwest (FOB Mill) prices have once again breached the US$100/t level.

Asian markets for HR coil were steadier this month following October gains, but European coil prices showed signs of life after seven months of steady decline (unsurprising to those who have seen prices move in a similar seasonal fashion over the past two years). A second round of price hikes appears to be on the cards in Europe which could help to bolster increases in an upward trending market.

In the US, steel makers will be hoping the double price hike totalling US$100/short ton for steel plate will materialise to some extent, as it is yet to significantly have any impact on the market. With over 40% of US participants to TSI’s steel sentiment survey expecting demand to rise in the coming quarter, there may be some support for such in-creases. In Europe, the demand scenario is more bearish, with only 21% of all respondents to TSI’s survey expecting an improvement in demand.

The forward curve for North European HR coil swaps is currently in contango for the front months, with the bid/offer mid-point for the January swap at around €493/t. The Q1 2013 swap is priced at €491/t. The forward market is pricing in some weakness thereafter with Q2 2013 at €485/t, but bids have moved higher since physical spot prices firmed.

In United States after near 2-year lows in October, HR sheet prices in the US Midwest bounced back in a typically strong fashion - up US$40/short ton (+6.6%, 4-week change). US Midwest sheet markets strengthen after October falls, climbing +3.8% month-on-month.

Supply fears averted in Europe as Italian authorities rush through legislation to keep Ilva’s Taranto works operating

Chinese export prices continued to climb, although prices stumbled in the last week of November. A return to profitability encouraged Chinese producers to increase output.


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