Steel futures on LME sag on poor demand Prices plummet to $255/t as construction projects slow down
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Steelmakers now announce nothing but production cutbacks, redundancies and earning warnings.
Reuters
London, Dec. 2
Steel futures on the London Metal Exchange hovered close to contract-lows on Monday, as production cutbacks from steelmakers failed to lend support due to poor demand prospects. Billet and rebar prices in the Black Sea and Turkish physical market have climbed above $400 a tonne in the last couple of weeks on the back of demand from Turkish stockists, who predict the prices have hit rock-bottom.
WEST ASIAN DEMAND
But the rally has run out of steam due to lack of demand from the major export markets such as the West Asia, where construction projects have slowed down or been put on hold due to lack of financing, triggered by tight credit markets. "The rally was unjustified, there is no real demand," a UK-based steel trader said. Turkey-based traders said mills had tried to push prices higher after they collapsed by more than 70 per cent since July, but prices came off due to lack of demand.
CONTRACTS FALL
On the LME, the Mediterranean three-month billet contract was last quoted at $312/tonne, almost unchanged from last week's levels and off from a high of $420/tonne in mid-November. The contract touched its lowest since launch at around $255/tonne in late October.
The Far-East contract was at $280/330 a tonne after firming to around $385 a tonne.
In the physical market, traders quoted Turkish billet at around $380 a tonne free-on-board (fob), off from $450 a tonne in mid-November, when brief appetite from countries such as Syria, Iraq, Iran and North Africa pushed the price higher.
Billet is a semi-finished form of long steel, mainly used by the construction industry.
OUTPUT CUT
Steelmakers, who have enjoyed hefty profits and consecutive price rises in the first half of the year, now announce nothing but production cutbacks, redundancies and earning warnings {ndash} and even the world's biggest is not immune to the slowdown. Last week, ArcelorMittal unveiled plans to slash up to 9,000 more jobs, saving $1 billion a year to counter the impact of the global economic downturn.
On Monday, Finnish steel maker Rautaruukki cut its sales and profit forecast and said it would cut jobs and production. The world's biggest steelmaker ArcelorMittal, Europe's second biggest Corus, Russian Severstal and many Chinese steelmakers have announced cutbacks.
LME steel traders said weaker prices have pushed some steel traders to deliver to LME-approved warehouses. LME data shows more than 32,000 tonnes of billet stocks in warehouses compared to nearly 28,000 tonnes last week.
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Source : Business Line |
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