Stock levels are the key

摘要

Early in the year service centres reported that stock cover in general had reached 4 months or more. The ratio is now down to 3.5 months, but with the target remaining at 3 months or less there is still much inventory to run down. At the current rate stocks will not reach target levels until well into the Third Quarter, when demand is seasonally low, and perhaps mills will add a few days of idle time to their customary maintenance closures, just to tighten the market a little.If the market is not ready for a rise, it is hard to see mills forcing a recovery by determination. There have been too many reports over the past few weeks of domestic mills discounting below import prices to move their products. While mills fearful of joining the growing list of steel companies in Chapter 11 protection may be driven to sell at any price which brings in cash, mills with stronger balance sheets are also discounting in an effort to maintain utilisation rates.