Wednesday, April 06, 2005

Steel Strip Price Increases?

Meps is reporting Steel Strip producers are having difficulties imposing Q2 price increases.

The general weak market conditions in the strip mill segment extended into March and expectations of price increases of around 15.00 eur a tonne in the second quarter look as though they will be difficult to achieve, according to the latest forecasts from steel consultancy group MEPS International.

“Most EU producers were indicating increases of at least 15.00 eur per tonne for second quarter deliveries. It is now becoming clear that such rises will be difficult to achieve given the high level of stocks in the supply chain. In fact, we are reporting small decreases in March for the coated and cold rolled products,” MEPS said in its latest research.

The consultancy is forecasting a “slow, but steady deterioration” in strip mill prices over the next twelve months. “Any possible gains which may have been obtained from higher input costs will probably be lost due to the current oversupply situation. Any price recovery will depend on the mills curtailing production soon,” MEPS said.

Plate prices also slipped this month. However, the prospects are for increases in the second quarter. However, the malaise in the strip segment is likely to work through into the plate market in late summer.

In the long products sector, the poor winter weather extended into March. The anticipated price stability was transformed into significant reductions as a result.

“We believe that demand will pick up for all products in May. Moreover, the escalating price of iron ore and coal will probably lead to higher scrap costs when consumption rises,” said MEPS.

We are finding great difficulty in maintaining the price increases gained last year, so I suspect the only way the producers can maintain price levels is by reducing supply, which is coincidently what both Arcelor and Thyssen Krupp appear to be planning!

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