Meps most recent article is forecasting higher than previously predicted price increases for carbon steels.
Inventories at the service centres are coming down slowly. Further mill price increases are anticipated in the coming months as higher scrap costs are recovered. As a result, we have uprated our past forecast. Real demand is improving and the import threat diminishing, at least in the short term. Consequently, we forecast a substantial rise in the average price over the next 5/6 months. Prices should peak at a figure close to the high point of the previous cycle in mid 2006.
We expect the current scrap price to decline later in the year as the rate of increase in global consumption starts to slow down. A price slippage is predicted for the second half of 2007. Inventories in the United States remain stubbornly above the desired levels for existing real demand in the market place. However, we caution that in the current climate, market fundamentals can be upset by actions in other parts of the world - particularly affecting price offers by importers.
Scrap surcharges are expected to surge in the coming months. Further steel transaction price increases are almost inevitable in the short term and our forecast has been adjusted accordingly. Sales activity is reported to be at acceptable levels. This leads us to believe that the average price will continue to expand for several months ahead. The figure in mid year is likely to be at a record level - beating the previous peak value recorded in October last year. Domestic mills are pushing up prices.
In the second half of 2007, we forecast a steady reduction in price. We believe that the scrap cost will decline as the rate of increase in global consumption slows. A large proportion of the steel price hike is associated with scrap costs.