Flat Steel Prices bottomed ???
With HR Coil prices touching 800 USD FOB and Plate prices softening to 1100 USD FOB have we reached the bottom of the slide ?
Europe softening , USA slow the misery does not seem to be complete. Should buyers hold back purchase decisions ? What does your forecast say ?
September 15th, 2008 at 9:59 am
Price correction in steel is unavoidable…any idea about Chinese steel prices …do you have any trend from China market on BQ plates.
September 15th, 2008 at 12:30 pm
Beginning Sep, we at macsteel thought $900 cfr was hrc bottom. We are wrong by about $50 already. I dont see any room for further drop. Expect commercial hrc to stabilise at $800-810 cfr and re-roll hrc at $830-850 cfr.
September 16th, 2008 at 11:15 am
Steel Prices started going up from end Dec.07 - Jan.08 onwards. Though the cost of inputs during last few months have gone up by USD 100. The steel prices shoot up by USD 350. The correction was obvious, infact, should have taken place bit early. I feel the high tensile plate prices would settle at USD 1000, could be due to post olympic effect.
September 23rd, 2008 at 2:31 pm
I want to congratulate Shah Bros on the manner in which they have grown the business, and I look forward to reading the blog and customer comments regularly.
Prices have fallen, and producers who have focussed on lowering their cost will be the winners. The structural nature of demand has not changed, and demand will continue to grow at 3% to 5% globally. So we can be sure that iron ore/coke producers will continue to milk the situation and ask for increase in prices next year also.
While steel prices look like they have bottomed, the turmoil in financial markets, and lack of liquidity in large consuming markets, will continue to have a drag on commodity prices, and hence there is a possibility for market to correct lower than cost of producing mills.
however, as we have seen in these various corrections over the last 5 years, once buying re-starts, it takes only 6 months to achieve an average price higher than last years average price. So I for one consider this a buying opportunity.
September 24th, 2008 at 9:23 am
@ Sanjay
@ Rohan
@ Mr Panse
@ Dhruv
Thanks for participating on our inaugural blog.
and announcements on happenings at our end.
I hope to make this a forum for suppliers, buyers and steel producers to exchange views, make forecasts ( we will track who was closest to actual
To make my own forecasts I see coil prices still dipping to around 680/700 fob levels in China, though some stray action in Russia at these levels have been heard.
Plate prices I beleive have some furthur scope of correction but Panseji 1000 USD CFR for HT plates sounds difficult.
Sanjay the BQ plate prices in China have corrected to some extent but still @ 1400 usd levels
Lets keep this exchange alive. Do visit and post your views and write to us for any suggestions.
Happy Blogging
September 24th, 2008 at 1:37 pm
The market is moving into a stablisation phase from hereon. The fundamentals of demand are good , however factors beyond the steel industry are influencing the same.
Its time to rekindle this demand , good luck
September 24th, 2008 at 4:52 pm
I agree with Sanjay Bhandari that the sharp decline in steel prices are due to factors beyond the steel industry. The sudden US financial crisis has catalysed this effect. Maybe we haven’t seen the bottom yet, but, I believe once the prices bottom, the rise to stability will also be rather sharp.
Hoping that day comes soon!!!
September 24th, 2008 at 7:11 pm
What Dharmesh and Dhruv say is correct, that the market is controlled by the factors beyond the steel industry. But the bottom line is the prices are coming down.
In today’s 2008 China Steel International Trade Summit in Beijing, we saw that even the big shots from the mills like Bao Steel and Hebei Steel Group are confused regarding the predictability of the market.
There was a blanket remark from most of the speakers that the slowing down the demand in the domestic market has led the steel mills to drop the price. In order to strike a balance, will the Chinese Govt allow an increase in export? In that case the Govt.may not insist for increased export tax, resulting in the the prices to stabilise.
September 25th, 2008 at 3:49 pm
News of production cut backs in China, stop buying of Iron Ore by China hence fall in spot prices of Indian Iron Ore, no bidders for RINL pig iron tender in September, scrap prices in Turkey touching US$ 350 levels these are some symptoms for weak steel market which is ahead. I think the prices will further go down in the levels of USD 700 to 730 pmt before stabilising during end October. However it may start picking up during November with a fair recovery in the levels of US$ 800.
September 25th, 2008 at 5:25 pm
Congratulations to Shah Bros for developing their company to such a success.
Sanjeev suggested to give our views :
We decipher that markets would remain under pressure not only due to demand slowdown but also due to extreme limitation of financing - its not easy anymore to get banks to confirm lCs of other banks + below situations w.r.t EU :
- AM has apparently firmly decided to reduce the blast furnace capacity during Q4/08 with at least 15% in order not to dump material in the market
- the reduction should take care of the spot buying (which is almost totally absent) and the reduced take off by the top buyers who have annual contracts
- the stock level across Europe is perceived as below average and lower then 1 year back when there was again a drop in the flat rolled market (Q4 is traditionally quite slow)
- naturally if consumption becomes substantially less then foreseen a.o. due to the limited credit availability then in principle the stock level relatively looks higher and last longer
- there are some important unknown factors like import of material and Eurofer is preliminary making noise to discourage the Chinese suppliers to bring more cargo to Europe then foreseen. Quite some lobbying is going on. Price levels in USA are not too bad actually.
- AM cannot afford prices to drop substantially and will do in Europe whatever is needed to maintain a certain price level which will only be marginally lower then Q3/08 levels
- 2009 especially Q1 is a big question mark and a lot will depend on the annual negotiations for iron ore, coal and coke but it is a general feeling that demand will be on a rather low level
Though not so negative or panicky for sure a reminder to be careful.
September 26th, 2008 at 5:03 pm
Congrats to Sanjiv for starting this. I am happy to add my cent to the discussion. Views are purely personal though!!
The pain on the price side seems to linger on, contrary to the weight of evidence in terms of support on account of cost, demand/supply balance.
Prices (adjusted to cost increase ) have retraced to levels of Nov/Dec’07 from where the upturn was witnessed up untill Jun’08.
Is this the bottom? Will the pain end here? Yes, it should. If we do not have any further shocks on account of financial market turmoil, there is a higher probability that we see upsides from here or at least stability between Oct-Dec’08.
The over all demand and supply story is intact and today mills realise more than ever the need to maintain profitability amidst cyclical shocks.
I would not hazard predicting price levels now, but do strongly and firmly believe that pain should end shortly.
September 28th, 2008 at 8:48 am
Congratulations to Shah Bros & t sanjiv for being so net savvy, inspite of the image of ’steel bazaar wala’!!
reg prices, if one could give accurate forcasts in steel prices (or for that matter in share prices), he would be richer than warren buffet!
Inventory reduction is on at all levels, so at the first sign of strength in global economic correction, the commodity markets should spark. Have we reached the bottom? as a manufacturer i certainly hope so! Most BF based manufacturers cannot afford cheaper selling price in HR Coils, & therefore there will be reduction of production below $750 levels. iron ore are either long term contracts or dipped slightly. Coke has moved up. coking coal is not soft. chinese manufacturers cost is $800minimum ex their factory. November first week -first sign of upward movement, i believe….
let me warn again–i am not warren buffet
September 28th, 2008 at 12:15 pm
Thanks Rajesh. Just as you’ll moved from a ” steel Bazar guys” image to Steel Producer , we are steadily moving to be a Global Steel trader or with India Shining maybe we can be called a Global Steel Bazaarwalla.:)
I agree substantially to your expectations but probably in short term we will see the bottom of 675/ USD CFR before we settle closer to 750/800 band in near term.this I believe will be due to the pressures in China of huge capacities hungry for orders.
Costs will be important in restricting downfalls. Have asked Steel Authority and JindalSteel for their vision. Let’s hear them tomorrow
Meanwhile great blogging all. Please do visit and post once a fortnight or more. Who knows we will find a Wareen Buffet amongst us :))
September 28th, 2008 at 2:45 pm
My compliments to the Management of Shah Brothers for visualising and implementing this innovative idea for sharing and exchanging information.
The global economic outlook seems quite grim and will affect investments in new projects. While there is still some room for HRC prices to come down, I personally expect some major correction on Plate prices. The price differential between Commercial Plate and HRC is likely to come down to levels of $ 150. Also the abnormally high extras for special grades of Plates is also likely to come down to more reasonable levels.
Overcapacity of Plates in China is going to be a matter of concern on a long term basis.
September 29th, 2008 at 2:00 pm
This is great Sanjiv - congratulations !
As you may aware, long products have taken a nosedive….latest reports say that Billets are offered at $ 500 FOB and even lower in some cases. Debars are available at $ 600 FOB. HR Coils have hardly any takers at $ 800 CFR. Only plates are still the reigning Kings so you should have no problems !
Moreover special grade plates remain in short supply and deliveries are also quite long - 6-9 months.
Let’s wait and watch the market developments.
September 30th, 2008 at 12:50 pm
Dear Sanjiv ji,
warm regards and congratulations on your attempt to create awareness and more flatness regarding mild steel flat products, this blogging will surely and hopefully help, traders like us to manage the stocks and commitments without getting dragged down
we have been in pursuit to not only just indulge in sell but also end to end solutions regarding mild steel matters
we expect more informations at all times and very good business relationship ahead
September 30th, 2008 at 5:54 pm
Am happy to see this interactive forum on steel. As a regular buyer, access to forums such as this provide a unique insight and perspective, the value of which is hard to quantify.
Thank you all for your interesting inputs.
October 1st, 2008 at 11:07 am
Hi everybody.
Seems like this is a bottomless pit for Indian importers. With the USD approaching INR 47.50 and LIBOR at an unprecedented 6.88%, the possibility of imports even at the price levels today seem unviable.
Whereas, I hope that the prices rally and stabilise at some level in the near future, unless, the INR appreciates & LIBOR comes to past levels, all this speculation on prices has little meaning.
sorry, sounds depressing but the call of the day seems to be to lie low and wait for some time till sanity returns.
October 7th, 2008 at 6:51 pm
Hi Dharmesh
Thanks for the good news….as a steel producer, i always feel import is not viable, after considering 3-6 month uncertainity in steel arrival, Foreign Exchange risk, etc
Anyways, why impost products which can be made here, & which are essentially in surplus….
& that, currently, does include BQ Plates, also,no?
October 8th, 2008 at 10:08 am
Unsold stocks in the market are high and with liquidity crunch there is still room for price corrections upto usd 50 pmt in the short term. Expect upward price movement only from 1st qtr 09
October 8th, 2008 at 10:36 am
Personally, I am an optimist but on the question “Flat Steel Prices bottomed ???” I have to say today the answer is no. the only thing that was preventing prices of flat products, and steel in general, from falling further was the high cost of raw materials. Scrap, pig iron, sponge iron, and the spot market for iron ore, have recently all collapsed and coke is also weakening. So the days of ultra high prices for steel making raw materials are over and this will enable and result in steel producers cutting prices further. So we have not seen the bottom yet. Anyone who says otherwise is probably sitting on stocks!
October 8th, 2008 at 11:06 am
Thank you Mathew for participating on our Blog. As probably the largest steel trading company in the world, I would give a high level of credit to your comment. Having said that, there definitely seems to be resistance from Chinese mill for below USD 725/- CFR for HR coils.
Considering the stock that we are sitting on, we can only pray that this is not a bottomless pit, as each mill tries to stop the bleeding.
Will re-visit this topic 2 weeks later.
Sanjiv Mehta
CEO
May 21st, 2010 at 9:07 pm
1)Can you update the data ?
2)Experts have talked about overall effects of slowdown of National Projects etc. due to fluctuations in prices & availability of steels.Who do you think will talk about the plights of SSI Engg. units who are compelled to accept such Project subcontracts without any escallation-clause,in India, being the actual executors of 80% if not 90,of all such Project Jobs ?We are one such,doing substancial jobs for expansions & revamps of SAIL Plants,compelled to accept BQ jobs at a raw material price of Rs.38,500/- per MT & buying them at upto Rs.56,000/- & also facing imposition of L.D. punishment occassionally.
May 21st, 2010 at 9:20 pm
Since SSIof India accounts for,for Project jobs & otherwise,upto 80% production,40% exports,50% effective employment,it has to be made mandetory for all the big Private & Public Sector Houses to allow price-escallations & more importantly,use of a norm of technical evaluation of pricing for such jobs being awarded to SSI in stead of taking resort to undue nogotiation/haggling with people who are available in abundance & many of whom are afraid to stick to reasonable costing for fear of losing the chances
May 21st, 2010 at 9:22 pm
Only waiting for comments
May 26th, 2010 at 6:03 pm
Dear Mr. Indrajit Sengupta,
Regret was away for one month in areas of no internet connectivity.
I fully agree to the plight of the SSI Engg. Units & the advantage being taken by large scale public & private sector houses in forcing them to accept orders without escalation.
It is the distinct case of arm twisting which continues in lieu of lack of protocol or joint representation. Ideally strong directions through associations should work. Unfortunately, associations in India are not well represented and directives/recommendations given by them are treated most lightly.
My suggestion would be to plan material procurement rather than hope or expect public sector or private giants to behave reasonably.
Will discuss with you personally a long term strategy which we have followed with companies like Thermax, which have shown tremendously favourable results.
Best Regards,
Sanjiv Mehta