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Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Global Steel Industry On The Rebound

Commodities / Steel Sector Sep 03, 2010 - 12:24 AM GMT

By: Anthony_David

Commodities

The fortunes of the global steel industry are on the rebound and prices are once again firming up. Analysts expect Indian steel prices to rise by about 5% from early September as the post-monsoon demand from the automobile and steel sectors heat up. The rise in raw material and freight rates generally drive steel prices upwards but the recently imposed ban on iron ore exports by the state of Karnataka is adding supply constraints to the equation as well.


India’s steel production during the current fiscal is expected to touch 65 million tonnes while consumption is expected to increase by more than 10% over the next five years. Similarly, steel prices in China have been on a steady marginal increase triggering production growth. According to Mr Hu Yanping, an International Finance Report analyst, steel prices may undergo corrections in the short term but would continue to rise in the medium term. The price hike also allows steel makers to scale down mill inventories.

July saw China’s manganese ore imports rise by almost 11% month-on-month and year-on-year. South Africa, Australia and Gabon were the lead suppliers as always with India, Indonesia, Malaysia, Morocco, Namibia, and Kazakhstan being the other major suppliers. Prices, however, are suddenly turning downward, perhaps as an attempt to settle prices in September. The September shipment prices for various grades of ore have been quoted at 17–24% lower than August prices. The drop in prices is a reflection of the lower prices of domestic manganese ferroalloys in China. The July import numbers are unlikely to be mirrored from August onwards given the surplus stocks of manganese ores at China’s wharves.

Global molybdenum prices have remained rather flat at about $15 per pound because of a slower than expected recovery of the economy and a weak demand for steel outside Asia. The long-term forecast for China and India’s demand for steel is promising and that is expected to drive molybdenum prices upwards. Meanwhile, analysts have advised investors to be ready for short-term price fluctuations.

An interesting development in the non-steel sector is the growing close relationship between the prices of molybdenum and silver. Both are used in solar panels and as the demand for alternative energy rises, the demand for molybdenum can only shoot up. Head of Commodity Research at Australia & New Zealand Banking Group Ltd Mark Pervan said, “The solar panel market is particularly strong at the moment, and there’s been an uplift for both silver and molybdenum demand for panels… I see this strong correlation continuing, and I think it will tighten up going forward.”

Export prices of Chinese magnesium are on the rise although the weaker demand recorded earlier has lowered the price range considerably. Independent market analyst Roskill Consulting expects magnesium consumption to grow by about 6% over the next few years, especially in the alloy market. Meanwhile global consumers are on the lookout for reliable suppliers to sign offtake agreements with since Chinese suppliers have not been able to generate enough confidence in the market.

By Anthony David

http://www.criticalstrategicmetals.com

The mission of the Critical Strategic Metals Web Site

is to serve as a monthly compass for those who take a fundamental view of investment regarding the Molybdenum, Manganese and Magnesium metals markets, are concerned with the emerging critical under-supply of these strategic metals to Western nations and wish to profitability chart their course. Each month we will research and provide, in as short and concise a manner as possible, the most applicable information available on resources that will have the biggest impact on our day to day lives. Click here to sign-up for our FREE monthly report

© 2010 Copyright  Anthony David- All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


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