Saturday, May 27, 2006

No respite in Steel prices in the third quarter.

European Steelmakers have already announced substantial steel price increases for the third quarter, and I am seeing predictions of similar increases around the world.

Steel prices, which had been expected to taper off in the second half of the year, are now expected to rise nearly 19% from current levels in the third and fourth quarters to offset rising iron-ore costs.

The increase could put extra cost pressure on manufacturers contending with rising energy and commodities prices.

Some analysts ratcheted up forecasts for steel prices following 19% increases in prices for iron ore.

Wall Street Journal

China's Baoshan Iron and Steel Co. Ltd. the world's sixth-largest steel maker, will raise third-quarter steel prices by more than 6 percent to bring them closer to global levels and compensate for rising raw material costs.

Reuters

Until two years ago, steel prices had remained relatively stable for a long time allowing steel users to budget ahead with some certainty. The recent volatility of the market makes those days seem far away.

MEPS recently published an article upon the instability of metal prices and the impact of speculators, which makes interesting reading. It is clear that making marketing decisions based on the future price of steel is becoming a dangerous game.

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