Wednesday, July 12, 2006

Latest MEPS Steel pricing reports

EU AVERAGE CARBON STEEL PRICES

The leap in transaction prices in June has prompted us to make an upward revision to our average flat products’ price forecast. Availability remains tight for both strip mill and plate products. The higher settlement for iron ore has encouraged the mills to push for increased transaction values. Moreover, the producers are also keen to recover the cost of zinc on coated products. The tight supply situation and input cost recovery leads us to believe that the peak values achieved in early 2005 will be surpassed towards the end of 2006.
We still believe that a rapid decline in transaction values will occur in 2007. Higher prices in the second half of this year are likely to attract imports from many parts of the world. There are signs that delivery lead times are starting to reduce. Moreover, customer inventories are likely to have built up to excessive levels by the end of the year.

NORTH AMERICAN AVERAGE CARBON STEEL PRICES

The extended delivery lead times and full order books prompted us to upgrade our forecast for the North American average flat products price. Import quotations have been rising in line with the upward trend in local values. Consequently, the import threat is not increasing.

We believe that customer inventories are starting to grow. At this time they are not excessive and, therefore, do not present difficulties for future mill order books in the near term. It is, however, probable that foreign supplies will increase in the coming months. This, combined with higher customer inventories, could exert downward pressure on prices as we approach the New Year. We believe that the inherent strength of demand should mitigate against a price collapse in 2007. We predict a steel price erosion to the end of the research period.
Source MEPS


No Great surprises there. Steel supplies continue to be tight and prices have hardened considerably, particularly on galvanised. In Europe the supply situation is further aggravated by the annual Steelworks closures in July and August

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