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Current market situation of galvanized steel business - Jan
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Because of rising raw material prices and the tight supply of hot roll and cold roll flat steel products, galvanized steel prices have also recently risen quite a lot in the global steel market.
In China, the European Commission (EC) started the anti-dumping investigation on China’s exports of hot dip galvanized steel sheet to the EU market at the end of 2007. However, China Iron & Steel Association (CISA) said that the EC does not have the enough evidence to prove that China HGI has actually caused damage to the EU galvanized steel industries and that most of the EU’s steel processing factories are against this investigation. CISA added that China clearly has already adjusted its export policy and has decreased a lot of GI export quantity to the EU market. On the other hand, even though the China export GI business is not as good as during the old times, the GI market is still good due to domestic demand, especially from China’s domestic home electrical equipment industries. Because of the booming growth of China’s economic situation, people are more willing to buy consumer goods; therefore, the strong demand from China’s domestic market and the rising raw material prices suggest that China’s galvanized price can remain firmly at the high level.
In Taiwan, Yieh Phui Enterprise exhibited its new green steel coating products last November. The new green steel products have been qualified by RoHS standard in Europe. The new product can reduce the user's electricity cost, to prevent bacillus growth and so on. YP said it has already started to produce 5 feet of galvalume (55% Al-ZN) and pre-painted steel products; those specialized and high quality steel products will bring Yieh Phui a greater opportunity to get deeper into the European and US markets. On the other hand, China’s new export hot roll coil price has increased a lot and along with the rising freight charges, Taiwan’s hot roll steel price has risen again in its domestic market. The rising hot roll steel price has also caused Taiwan’s GI price to increase, especially as the GI source has recently still been short in the market.
However, some buyers said that the unstable market price has made them uninterested in purchasing GI source at this time; although the major GI supplier has announced new price increases for next month, most buyers still prefer to begin new purchases after they come back from the Chinese New Year vacation. Before the dateline of this report, the news reported that China’s mills have announced their intention to raise CGI price, so Taiwan’s mills have a highly possibility of raising the galvanized price after the Chinese New Year vacation.
Due to the sub-prime mortgage problem and weakened end user requirements, the total demand for construction steel products has slowed in the US domestic market; however, the tight supply in the US market and the rising hot roll and cold roll steel prices have still caused the GI price to rise in the US market. Generally speaking, since the hot dip galvanized steel market in the United States is still in a short supply situation, US GI steel mills have informed their clients that they are going to increase the GI price for February shipments. It made buyers increase their purchase quantity because they worried about higher prices coming if they delayed the purchase timing. Now the import GI source in the US domestic market is limited, especially for heavy standard products. The major exporting countries to the USA are: Canada, China, India, Mexico, Taiwan, South Korea and Brazil; their total export quantity in 2007 was much lower than in 2006. At the same time, because US steel mills have reduced their steel output during the whole of 2007, most end users and coil centers have only low stock levels, so the GI steel price can remain firm in the US domestic market.
According to the Chinese government, its new export tax policy and anti-dumping investigation have caused China’s exported hot dip galvanized steel quantity has decreased a lot in Europe. People expect that the total HGI exported quantity in the first half year of 2008 may decrease by about 80 percent compared to the earlier situation. Without the competition from the import GI source, European steel mills have a greater chance to increase their price; the new sales price between the European steel mills and local buyers is between €690 to 700/ton, about €100/ton higher than last year. One Britain dealer said: “Now the European GI steel market has rebounded from the down side. Because of the high stock inventory last quarter, the GI price level lagged behind the rising level of HR and CR steel prices. However, the China and India import source will not get into the European market before this July; so the GI price has a chance to rise.
In conclusion, the rising hot roll price has caused the galvanized steel price to rise in the world’s major areas. There still are a few points we need to be concerned about for the future GI market: First, according to the China market, it seems that the GI steel demand continues to be strong in its domestic market; however, because there are still several new GI production lines that will start production within this year or early next year, the newly increasing GI supply quantity may still hurt the GI market price in the near future. Second, the major reason for the GI price increase this time is the rising raw material price, and weak demand from end users; although the total GI supply quantity in the US market is still limited, if the demand on the end user side keeps decreasing, the GI price may still drop in the future.
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Report by
Johnny Lin
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