Hopes grow for global flat rolled price recovery

As of early May, the international markets are waiting for flat rolled steel producers to announce their June production price levels. The last three months, and particularly April, have witnessed serious price reductions of flat rolled products due  to lack of demand. This price erosion, which was initiated by the CIS producers' price cuts, was followed by similar actions taken by Turkish and European flat rolled producers.
 
By early April, flat rolled steel prices had started to lose strength mainly due to the impact of the lack of demand in the Middle East and North Africa (MENA) countries amid the regional political turmoil, and also due to the strength of the euro against the US dollar causing a price softening in the European flat rolled markets. Therefore, towards the end of April, buyers started to think the bottom had been reached and so purchasing activity started to pick up.
 
European producers became more interested in import booking due to the strengthening in raw material prices and of the euro against the US dollar. In early April, Italian producers reduced their price levels from €580/mt ex-works down to €520/mt ex-works in response to the drop in import offers to the range of €480-520/mt. The volume of bookings from Turkey to Europe thus accelerated. In response to this acceleration, Turkish flat rolled producers increased their prices to as high as $730-740/mt FOB levels. New price levels are expected to indicate a further increase.
 
Export offers by CIS producers dropped down to as low as $630-680/mt FOB levels in April. For June production the CIS producers have still to announce their new price levels. They are expected to announce price increases, basically due to the recent scrap and pig iron price rises and the increased buying in the market aimed at building inventories caused by the belief that prices have finally hit bottom.
 
Demand has not yet recovered as much as required; however, the rising raw material costs and the market activity sparked by stock replenishing give the impression of an uplift in flat rolled prices globally.