World HRB export price may decline temporarily

WSD has revised the timing of the possible evolution of events in the steel industry due to the adverse consequences of the sub-prime lending crisis. On a near-term basis, steel traders are suffering the most. They are facing rising interest costs, higher freight rates, reduced availability of funds and reluctant buyers. What’s the consequence? Given that finished steel product trading activity is drying up for the moment, this probably means that spot export prices for hot-rolled band and a number of other products are headed down temporarily – at least in those markets in which traders have an important impact.

In contrast, we hear that trading activity in semi-finished steel – billet and slab – is probably still close to normal levels, in part because it is “mill-to-mill” business. (Note: Global steel product trade is about 280 million tonnes per year, or about 22% of finished steel product output, plus about another 65 million tonnes in billet and slab.)

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