NORTH AMERICAN AVERAGE CARBON STEEL PRICES - LATEST FORECASTS FROM MEPS

Flat products transaction values are likely to continue decreasing over the next few months, even though the steelmakers are operating close to, or under, the cost of production. There are rumours suggesting that further discounting is being undertaken. This could add further downward pressure in the short term. However, we do believe that we are nearing the bottom of the current price cycle. Import volumes are dropping and local mills are expected to maintain production cuts and extend summer shut downs. Blast furnaces will not be brought back on stream until the steelmakers are confident of their ability to sustain higher output levels. Inventory reduction is predicted to be almost completed in the third quarter. This should bring stability in steel selling figures around the middle of 2009.

Transaction values are forecast to rise during the final few months of 2009. Government stimulus packages should begin to lift steel demand towards the end of the year. Reduced production levels, coupled with low inventories in the market, may create a supply shortage as order volumes increase. This will, almost certainly, lead to extended delivery lead times and rising prices. Seasonal factors may temper these advances initially. Larger gains are then predicted for early 2010.

Prices for all long products are expected to decline further in the short term. Declining raw material costs are likely to put additional negative pressure on selling figures as end user demand remains weak. However, market players are hoping for a modest seasonal revival as the spring proceeds, which, if this occurs, could limit some of the reductions in steel values.

Steel prices are forecast to rise after the summer period. Credit restrictions are likely to ease during the second half of 2009. This will give many customers improved purchasing ability and help with modest inventory rebuilding. The infrastructure stimulus packages should also boost steel demand but its full effect will not be felt until at least the end 2009. Consequently, we do not envisage any significant gains in selling figures until early 2010.

Source: MEPS Steel Prices Online                  MEPS - N.American Carbon Steel Prices