We believe that it is time to fasten our seatbelts as an industry. Inventories continue to decrease, foreign nations (Japan and Taiwan) are actively seeking to accumulate scrap, primary mills see no compelling reason to restart facilities, and the Chinese are "arresting" employees of the iron ore supplier companies that they are in "negotiations" with. Surcharges are volatile as a result of the 40-percent increase in steel scrap this month alone. Severstal announced it was ceasing all North American operations today as I prepared this report (5 August 2009). I cannot confirm that any BOF melt bar capacity is currently running in North America.
The prices of the raw materials that we track have reversed course and are now higher than they were in January with two exceptions: AMM report of stainless steel 303 bars and China Coke. Year over year, all prices are down significantly. Price swing (Δ) July 2009 compared to May and January 2009:
In our research we found news stories indicating “hoarding” behaviors by Japanese and Taiwanese companies, indicating that price rises are expected and foreseeable globally. Based on demand, the escalation in copper prices appears to be fueled more by speculation than by industrial consumption. According to one press report there’s a complete “…disconnect between the price of the commodity (copper) and underlying demand.”
Our first glimpse of a steel surcharge for September for Electrical Steel was $170/ton; $8.50/cwt! (AK Steel website). Fasten those seatbelts!blog comments powered by Disqus
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