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Cru Steel

Essay by   •  February 25, 2011  •  Essay  •  316 Words (2 Pages)  •  1,272 Views

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Prices surge вЂ" but cracks in demand appearing

The continued rise of finished steel prices in world markets has seen the CRUspi global index rising by

13% month-on-month in May to reach a new record level of 268.0 вЂ" the largest increase in percentage

terms since early 2004.

US Midwest steel sheet prices rose by around 20% in the due to tight supply and a continued absence of

import pressures. Although US sheet prices are currently at a large premium to European and, more

importantly Asian prices, the weakness of the dollar combined with high freight costs, as well as strong

demand in other markets have kept import pressures at bay for now. If sheet prices settle towards the

higher end of recently announced price increases however, it may be that despite these factors, imports do

again become an issue. In the long products market, a spike in scrap prices of between US$147-190/l.ton

caught some producers by surprise, but nonetheless necessitated further increases in finished products

prices. Pricing strategies varied by producer with structurals rising the least, while bar and rod mills were

able to use the quieter import situation to raise prices by between US$150-190/s.ton.

Despite patchy demand, European sheet market fundamentals remain tight on the basis of limited supply.

Price rises in Europe have been more moderate than in other regions, and as such, a sudden downward

correction seems less likely. Mills seem careful to keep production in line with demand to maintain

current prices, and latest announcements from ArcelorMittal suggest that sheet prices should remain firm

over the summer period, despite a predicted slowdown in demand. Meanwhile, European long products

mills are operating at full capacity with crammed orderbooks, as supply/demand

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