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Industrial, Industrial Goods, Industrial Supplies, Materials, Metals, Steel

Balli Steel Reports Global Steel Market Experiencing Sharp Rises Since Chinese New Year

Balli Steel, one of the world’s largest privately owned independent commodity traders, highlights that steel markets across the globe have experienced sharp price rises since mid- February 2010. The first six weeks of the year had seen a flat market with the majority of commentators believing that prices would most likely fall back to November 2009 levels, however conversely, prices started to rise sharply coinciding with Chinese New Year (14th February).

Balli Steel reports that the price has largely been driven upwards by restrictions in the availability of raw materials and by steel mills maintaining a tighter control over supply. Balli Steel anticipates that prices are likely to continue to rise in the short term, however, there is the possibility that the market may start to show signs of fatigue in the third quarter, especially if the steel mills fail to retain supply restrictions.

Balli Steel reports that prices have risen by approximately US $200 per tonne since the start of the year regardless of their base level, equating to increases of approximately 35-40%.

Nasser Alaghband, CEO of Balli Steel commented: “Contrary to the views of most commentators at the beginning of the year, we have seen a strong rally in steel prices over the past six weeks, albeit based on relatively thin trading volumes. We anticipate that prices are likely to grow more conservatively over the rest of the year, although prices may come under pressure in the third and fourth quarters if steel mills decide to increase production.”

Although steel prices have risen across the board, there remain significant regional market variations. The Chinese market remains key, accounting for significant global demand and over 50% of worldwide production, however despite surpluses, China has not been an aggressive exporter. Elsewhere in the Asian market, demand from India has also remained very strong with significant imports made in the first quarter of 2010.

Via EPR Network
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Global Steel Recovery To Continue Into 2010

Balli Steel, one of the world’s largest privately owned independent commodity traders, anticipates that the global steel market will continue its recovery during 2010. Following a fall in apparent steel usage of approximately 15% in 2009, Balli Steel believes that usage could increase by up to 9% next year. However, consumption levels are unlikely to reach their 2007 peak until 2012 and recovery is liable to be driven by the Far Eastern markets, especially China, as European markets continue struggling.

Nasser Alaghband, Director of Balli Steel commented: “We are anticipating that the steel market will continue its recovery next year but growth is expected to be moderate and driven by emerging economies, with China’s influence continuing to be critical. There is a danger that consumption growth will not match the increased production capacity which has been created in recent years, which could lead to the possibility of oversupply.”

The economic downturn has severely affected demand for steel with apparent usage expected to fall by -32.6% in 2009 to 122 million metric tonnes*. This fall in consumption has led to a slowdown in production and Balli Steel estimates that many of the mills across Europe are operating at between 40% and 60% capacity.

The global recession has led to property downturns across the European Union resulting in an oversupply of both residential and commercial property which in turn has led to a significant slow down in construction. With the construction accounting for approximately 50% of global requirement, the property downturn has had a significant impact on the steel industry across Europe, particularly in Portugal, Italy, Ireland, Greece and Spain.

Projections from the World Steel Association suggest that steel usage across Europe could grow by up to 12.4% in 2010. However, Balli Steel believes the industry still faces a number of challenges with governments cutting spending on public sector and infrastructure projects.

Steel consumption in the Middle East has fallen at a slower rate than in Europe with usage falling by -9.8% in 2009 to 38,834 million metric tonnes*. The demand for construction steel has fallen across the UAE, but Dubai has been hit particularly hard due to a decline in the demand for property in the first quarter of the year. Balli Steel reports that construction steel demand in Saudi Arabia is likely to remain strong in the medium term as the country looks to develop good employment prospects for its population.

China continues to dominate both the Far Eastern and global steel trading markets accounting for almost 49% of world steel production as well as approximately 50% of global consumption equating to 1.5 million tonnes per day. There are signs of over production, but the Chinese government appears reluctant to instruct the steel mills to reduce supply. The result may be an increase in exports, despite existing trade tariffs, especially for galvanised steel.

India, has been largely sheltered from the global economic crisis but its steel market has remained relatively subdued. The country’s continuing economic expansion, combined with growth in domestic consumer demand and infrastructure projects should ensure that demand for steel in India will increase in the medium term.

Other smaller Asian markets are also showing signs of growth and recovery.

Via EPR Network
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Industrial, Industrial Goods, Industrial Supplies, Materials, Metals, Steel

International Steel Returns To Normal Trading Levels Reports Balli Group

Balli Group Chairman, Vahid Alaghband, reports international steel market bottoms out and returns to normal trading levels.

Vahid Alaghband, Group Chairman of Balli Group, one of the world’s largest privately owned independent commodity traders, has stated that he believes the indications are that the international steel market has now bottomed out and is once again experiencing a normal trading environment, albeit at reduced volumes.

The return to regular steel trading confirms that the market has now recovered from the state of paralysis it found itself in last year.

Vahid Alaghband commented: “The international steel trading market is no longer frozen and we expect further stabilisation over the next 6-12 months. The return of normal trading and the relative stability of prices is an important milestone in the recovery of the construction industry and for the global economy.”

Nasser Alaghband, director at Balli Steel, added: “The bottoming out of the market for steel follows a cut in capacity by producers in response to the global downturn in construction and the seasonal fall in demand for the northern hemisphere. The growth of the steel futures markets for construction steel in London and Dubai since 2007 has helped increase price transparency and has enabled decision making on capital investment.”

Major steel consumers – property developers, construction firms and ship builders – welcomed the growth of the futures market for steel as it provides them with a means of controlling risk by enabling users and suppliers to lock in prices and avoid losses.

Balli Steel experienced good trading levels in Q4 (2008) and expects Q1 to be slower, partially due to seasonal variations in the market. Near normal market conditions are predicted for the second half of the year.

Nasser Alaghband observed: “The market became incredibly difficult and almost non-existent early in 2008 as demand, principally from the construction industry evaporated in response to the global financial crisis. The situation eased during the third quarter and by Q4 the market began to trade again in a normal fashion.”

“One major obstacle to European trade is the loss of access to credit insurance as insurers such as Euler Hermes and Atradius re-evaluate their exposures in deteriorating economic conditions”, Nasser concluded.

About Balli Group plc

Balli Holdings, is a large private, multi-national corporation, headquartered in London, but with offices in Dubai and other key business hubs around the world.

Balli was established in 1982 and operates a number of affiliated companies specialising in commodity trading, industrial, real estate and private equity with operations in over 20 countries. Together with its affiliated companies, Balli employ over 2,000 people worldwide.

Balli Steel is the company’s principal operating subsidiary, and is one of the largest independent traders of steel in the world. Balli Steel provides raw materials and steel to a number of market segments including steel mills, steel service centres, pipe and tube makers, the oil and gas industry and other designated end user segments such as the packaging products industry.

The company’s real estate operations currently have a property portfolio of over $3billion, comprised of over 900,000 sq ft of property under development with a Gross Development Value of some $800million, and an additional 2million sq ft and a GDV of almost $2.5billion in the pipeline.

Via EPR Network
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