RESEARCH: Bullish run in global flat steel prices continues

The upward momentum in United States' flat product prices is yet to show any signs of slowing, with US HRC prices hitting new record highs during April. Steel supply is forecast to remain short of demand due to no improvement in underlying supply and demand fundamentals, which is propelling US flat product prices higher in the near term.

Based on the underlying supportive market fundamentals, we have upwardly revised our flat product price forecasts again this month but maintain the view that prices will peak during May. Although import supplies remain limited, imports are rising and we understand steelmakers may have slightly more spot availability next month, which would help to ease pricing pressure. We equally maintain the view, however, that any downward correction in sheet prices in the coming months will be modest and mild, with sheet prices forecast to remain at or near record highs throughout the rest of 2021.

Coil prices in Europe continued to rise to new record highs and regional HRC prices climbed over €1,000 ($1,204) per tonne for the first time on April 30. European steelmakers have been increasing their offers on a weekly basis and buyers have been more concerned with securing material than negotiating discounts. Price dynamics in the region continue to be determined by an acute shortage of material, with lead times stretching into the end of the third quarter of the year.

We have upwardly revised our European coil and plate price forecasts to reflect the latest spot market levels but we maintain the view that the uptrend should not continue for much longer. The latest data shows that flat-steel production picked up in March in Germany and Italy and there should be a return to normal output levels in the second quarter. Acciaierie d’Italia (formerly known as ArcelorMittal Italia) plans to restart blast furnace No4 in June, although there are some maintenance closures scheduled during the third quarter at other producers. Semiconductor shortages remain a problem for automakers, with some production outages at a number of European car manufacturers and if more material starts to appear in the spot market with early delivery times, it will be difficult for steelmakers to maintain the price rally.

Chinese domestic flat steel prices rose as we expected in April and export prices rose stronger than anticipated while producers started to factor in a possible removal of export tax rebates. We expect further price increases in the Chinese domestic market in May but prices should start trending down as we approach the second half of the year. In the export market, Chinese material remains competitive and we have upwardly revised forecasts in expectation of a return in trading activity in May but we believe that we are close to the pricing peak. The recent changes to the rebate system are not likely to have a significant impact on the price level in China because producers and international buyers have already priced in a removal of the rebates. Looking further ahead, Chinese HRC exporters will become less competitive in the seaborne market so will increase supply within China, while other producers should get more opportunities to compete in traditional Chinese export markets.

China's new ferrous tax regime to kickstart new era of steel

China's new tax regime for ferrous raw materials and steel exports will kick off a new era for the steel sector, one in which demand and supply will become more balanced and the country cuts its dependency on iron ore at a faster pace.

Chinese authorities announced last week that, from May 1, import duties for metallics and semi-finished steel would be removed and that export duties for raw materials such as ferro-silicon, ferro-chrome and high-purity pig iron would be set at 15-25%.

At the same time, Beijing also removed export tax rebates for major steel products: hot-rolled coil, rebar, wire rod, hot-rolled and cold-rolled sheet, plate, H-beam and stainless steel.

‘Definite boost’ to prices
The changes are music to the ears of steelmakers around the world, especially since they continue to power through a second quarter marked by historically high prices and marvelous profit margins for steel products.

They have been able to price in the rebate cuts even before the announcement, causing prices to increase continually in the first four months of the year. Take for example, hot-rolled coil exports from China, which have increased by 44% between January 20 and April.

aaron tan dont sour grape.. you just want to collect more right?
the steel theme is underpinned by infrastructure spending as most countries/economies aim to stimulate growth as the economy opens up. no business theme lasts forever but Hiap Teck's time is today

https://www.businesstoday.com.my/2021/05/05/rhb-investment-bank-launches-rhb-top-20-malaysia-small-cap-companies-jewels-2021/

Hiap Teck TP at 85c - Rm1.05

lambo already moving, time for netx next!

as businesses come back online, more will need acrylic products. this is a safe proxy bet on recovery!
solid management with a seasoned operator!

the opensys business model is geared to profit this year by virtue of their maintenance contracts. opportunity to buy comes after profit taking. great for consistency!

but vaccine doesnt cure the disease. this is basic science. glove demand is fundamental to provision of healthcare as means of the personal protective equipment (PPE). The biggest bottleneck is the ability to increase supplies to meet the surge in demand.
secondly, the availability of a vaccine does not mean the availability of supply immediately due to production constraints. there is >1 billion people in china who will have to be vaccinated first before anyone of us gets it

sad to miss the Rubber Glove boom is a once in a generation chance to make some money in the stock market. China has their A-shares boom, USA has their tech boom (Tesla $TSLA, Facebook $FB etc), we humble malaysians have this one chance with the rubber gloves. At this frothy levels what else can we buy???