This time I open my current review relaxed and proud about my last look into the crystal ball. At that time I had prohnosted a price increase of 25%. Actually it is 24% and with this good estimation I can compensate for my fear estimations from the last two times.
General price development for flanges and raw materials
- By mid-December, the price of raw material for carbon steel rose by a respectable 14%, which corresponds to an overall price increase of 34% (since mid-October)!
- Then the prices broke however, namely by about 10%. Excluding the prices in mid-October 2016, the current price increases by 24%.
- After coking cole had made an extreme price increase worldwide in the last months, the situation began to change in the middle of December. The prices were extremely volatile and have so far fallen by about 6%.
- The current increase of 24% in the material for flanges is not only due to the prices of coking coal and other raw materials, but also by restrictive environmental measures by the Chinese government, which led to a temporary production stop for some plants.
- At the LME the nickel price at the end of December was just over US $ 10,000. The markets are looking intently at how long the nickel can still hold over the 10,000 mark. Apart from reduced export figures from South East Asia, the reason for the price decline is also the reduced demand on the Chinese market.
- Also in the prices of stainless steel falnges there was a slight reduction in the price by about 3%.
Situation in China
- A slightly reduced economic growth in China is expected for 2017. At the same time, the Chinese PMI (Purchase Manager Index) with a value of 50.9 was at its best since January 2013.
- According to China Daily, China has reached the set targets with the so-called “supply-side structural reform”. The target for economic growth set by the government was achieved in 2016 with an economic growth of 6.7%. This object has been achieved with various measures such as, e.g. The abandonment of non-lucrative areas, reduction of overcapacities,
- The situation for the steel industry remains uncertain. The essentially unchanged situation in China’s low-cost imports (except for flanges) and the planned reform of emissions trading prevent a relaxation.
- The BME expects a significant increase in steel demand in German industry in 2017 due to a revival in the manufacturing sector and in industry. In fact, the last quarter of 2016 was the best for industry in three years!
Münster Forecast or my look into the crystal ball
Even if the seemingly incessant price rise in the carbon steel sector stopped from mid-December and there breaks in prices, it remains at an absolute increase of 24%.
The question that now move you as a purchases is:
When is the right time to place my stock orders?
In my estimation, the prices will remain mainly stable till the Chinese New Year festival at the end of January. There will be maybe slight fluctuations, but no extreme movements up or down.
But it reamains quite open how the situation will be after the New Year festival. Our Chinese partners expect that the prices will continue to pick up. However, there are no clear indicators for this. But regardless of the current situation there have always been significant price increases in the past few years after the holidays. These are due to the normal factors such as increased demand, etc.. There is no reason why it should be different in such a tense price situation. I therefore reckon with renewed price increases from mid-February of at least 5%.
So that’s it for today and I’ll send you the usual
dynamic greetings from Bremen – let it go well!
Yours Claudia Münster