By Taras Berezowsky
The Platts Steel Markets North America Conference wraps up today, and while Platts puts on a vey nice show - thanks for having us, folks - the insights and perspectives we gleaned from the three-day gathering, on balance, reflects trends that MetalMiner has been seeing in the steel industry for a while now.
On the supply side, Timna Tanners, metals and mining analyst for Bank of America Merrill Lynch, presented a bearish overview of global oversupply - not only in finished steel products, but iron ore and metallurgical coal markets as well.
With all the iron ore slated to come onstream from Fortescue (FSUGY.OB), Rio Tinto (RIO) and BHP Billiton (BHP), Tanners said that it would take 10% demand growth to absorb all that iron ore - a tall order, especially since U.S. and EU markets shouldn't contribute all that much demand for the rest of 2013 at the very least.
(Tanners' steel price forecast for HRC for the rest of the year stands at $610 per ton; we're pretty much already there - MetalMiner IndX data shows U.S. HRC at $606 today…perhaps good news for HRC buyers for the balance of 2013.)
"Just because capacity utilization is up doesn't mean the market wants it," Tanners said. That hearkens back to our steel price index report on January 9, when MetalMiner's Lisa Reisman said, "we still face a situation of over-supply coming from markets such as China, which will continue to put pressure on steel prices."
Joe Anton from IHS Global Insights agrees. In response to a MetalMiner question on what the U.S. supply/overcapacity situation looks like, he said that if we were operating in a vacuum, the U.S. could eat up current production rather handily based on current demand; but as long as we continue to import steel from China and elsewhere, this won't happen. (Also, keep an eye on U.S./Euro exchange rates moving forward, Anton advised.)
While agreeing on the supply and import challenges facing the North American industry, on the demand side, chief executives of major producers US Steel (X), Evraz (EVRZF.OB) and Severstal (SVJTL.OB) sounded hopeful across the board.
To be continued in a later post…