We maintain our belief that average world flat products prices will rise steadily over the next three months. Continued strengthening of the North American values as inventory building develops should offset any weaknesses in the EU and Asian selling figures. Increasing raw material costs are expected to force mills in all regions to push through price advances in the first and second quarters of next year. The Summer of 2008 is, however, forecast to be the peak of the price cycle for all flat products. During the second half of next year overcapacity in the Chinese market is likely to temper transaction price gains in that area, resulting in a widening of the gap between average Eastern and Western values. This will almost certainly result in exports from China increasing once again. We envisage global competition intensifying in a climate of oversupply - leading to a decline in the MEPS - World Average flat products price up to the end of the forecast period.
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