Global markets for coated steel continue to run at different speeds with regards to pricing at the start of the summer season in the northern hemisphere. In Asia, prices continue to rise although, as we note in our Asia analysis this month, much of this is merely cost inflation with steelmakers passing on higher substrate costs. Thus far, coated steel markets themselves are not showing much fundamental strength and indeed, we calculate that margins on these products are actually being squeezed.

In the United States meanwhile, both prices and margins are falling. In some ways, this merely represents US prices converging downward on those elsewhere after racing ahead during late 2019. But market fundamentals appear to be weakening in the US. The country is still grappling with the Covid-19 pandemic while other countries/regions in the northern hemisphere appear to have gotten the issue under better control. Sentiment is relatively fragile in the country and buyers are reluctant to place large orders even though economic activity does actually appear to be holding up well for now.

Europe finds itself somewhere in the middle. Prices and margins have improved slowly from their recent lows and European steelmakers are optimistic of obtaining further increases over the coming months. We believe those increases will come but perhaps at a slower pace than mills desire. A likely fall in import competition and the fact European steel prices are already relatively cheap will help. The European steel sector also finds itself in better shape compared with a decade ago in the immediate aftermath of the global financial crisis and this should help steelmakers avoid the worst effects of fierce price competition between each other as occurred back then.

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