Last week the World Steel Association announced the world crude steel production results for January 2009. World crude steel production for the 66 countries reporting to worldsteel totaled 86 million mt in January, marking a decrease of 24 percent as compared to last year's figures. All countries showed a drop in crude steel production, except China. Also, looking at the EU countries in terms of crude steel output in January, Germany's production decreased by 35.6 percent, Italy's production dropped by 40.4 percent, France's production declined by 46.7 percent, while the UK's production showed a decrease of 45 percent - all compared to the same month of last year.
As we mentioned in our previous analyses, China purchased hot rolled coils from overseas sources due to its domestic production cutbacks observed in particular in the last months of 2008. China's production was about 37 million mt in December, reaching approx. 42 million mt in January, i.e. up by 5 million mt month on month. In addition, in the Chinese domestic market, both prices and demand were trending at high levels up to the Chinese New Year; however, flats offers subsequently started to decrease, especially last week. As we mentioned previously, CIS countries' flats export offers will depend on the demand levels from China and other Far Eastern countries. Decreasing prices in the local Chinese flats market may lead import offers to lose their attraction. Thus, currently, import offers are heard but Chinese traders prefer to wait for the time being.
While crude steel production in Europe decreased by a margin of 35-47 percent in January, a contraction of demand, also for flats, was observed. Hot rolled coil base price offers from Romania to southern Europe are standing at the level of €330/mt ($426/mt) CFR southern Europe. Meanwhile, at southern European ports, e.g. at the Italian port of Ravenna, it has been possible to find hot rolled coil in a price range of €310-320/mt ($401-413/mt) loaded truck for 60-day deferred payments, while plate offers at the same port are standing at €480-500/mt ($620-646/mt).
HRC offers given from North African countries such as Libya and Egypt to Europe are at the level of $470-480/mt FOB. For HDG, offers given to Europe are standing in a price range of €450-490/mt ($581-633/mt) CFR southern Europe. Since the strength of the euro against the dollar has been decreasing, offers are at high levels in the European market. Thus, import offers have attracted no interest in Europe. Meanwhile, as regards exports, European producers have focused their attention on eastern countries, such as India.