STATISTICS
Worldwide Steel prices to plunge in fall 2005?
Steel mills in China, the world's top steel producer, are deferring shipments of iron ore as profits are squeezed by overcapacity, Beijing's fresh measures to cool the economy and a global economic slowdown according to this article by Stuff Inc.
"Mittal Steel Co, the world biggest steel maker, said in May that consumption in the United States was suffering from an inventory overhang. The recent deferrals come as spot iron ore orders from China have been at a virtual standstill since April.
Spot Indian iron ore prices - which are seen as the barometer for China's steel sector - fell to below $US70 a tonne, including cost and freight, from about $US95 early in April, iron ore traders said.
Another iron ore trader based in northwest of China said: "What we really want to know is when it (the iron ore price) will stop falling, where is the floor? If we knew when it would stabilise we could at least make plans."
In May alone Chinese prices for hot-rolled coil fell 1500 to 2000 yuan per tonne to below 4000 yuan per tonne, the Beijing trader added. The slowdown has pushed freight rates from Brazil to China down to $US20 a tonne, half the first quarter level, shipping officials said. Some of the world's top steel makers, including Arcelor and ThyssenKrupp, have already announced production cuts to counter a downward price trend."
As renowed financial analist Mike Shedlock (check his site) said: "With steel prices for 2005 term contracts rising 71.5 per cent back in April is there any wonder there would be plenty of supply, especially with the economy slowing? China was silly to lock in at those prices. Was that so hard to see? It now appears that buyers locked in prices right at the peak of the market.
Now what? Housing stalled in the UK and OZ, SUVs are piling up everywhere, China has acted to curb its housing bubble, and the US housing market will eventually break as well. Where is steel going?"
The London Metal Exchange (LME) is the world’s premier non-ferrous metals market, with highly liquid contracts. It is an innovative Exchange, whilst maintaining its traditional strengths in a modern business environment. It remains close to its core users by ensuring its contracts continue to meet the high expectations of a demanding industry. As a result, it is highly successful, with a turnover value of some US$2,000 billion per annum. It is a major contributor to the UK’s invisible earnings, responsible for more than £250 million in overseas earnings each year.
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