WORLD AVERAGE CARBON STEEL PRICES - LATEST FORECASTS FROM MEPS

April month-on-month (year-on-year) percentage changes:

All Products Composite Price: +11.6 (+36.4)

A substantial increase of $US80 per tonne was noted in the MEPS – Global All Products Composite price in April. Advances were recorded for all categories in all regions researched during April. This was due, mainly, to considerable increases in mill input expenditure but coupled with supply shortfalls in some areas. Demand from the automotive and domestic appliance sectors improved. However, sales to most other end-users increased as buyers purchased ahead of further impending price hikes. However, real demand improvements were only modest in many steel consuming segments.

MEPS forecast has been upgraded in April. World selling figures will, almost certainly, climb further in the short term due to rapidly escalating raw material values. However, restricted availability in the market should ease as blast furnaces re-start over the coming months in most regions. Consequently, steel price rises are likely to be limited in the third quarter of 2010.

We believe that spot market iron ore costs will fall in the third quarter of 2010 as world crude production growth declines. Due to the time lag involved for the new quarterly contracts, this will impact on mill input expenditure during the final trimester of 2010. A decrease in the MEPS – Global composite price is, therefore, predicted later in the year. However, a revival in transaction values is envisaged early in 2011 as the world economy strengthens.

The new pricing mechanism for iron ore and coking coal could see renewed interest from speculators. This would add to already volatile spot market prices. The implementation of an iron ore surcharge on steel sales in the longer term is a possibility in the future. This would automatically pass changes in mill input costs, resulting from the new quarterly contracts, to the customer.
 

Source: MEPS Steel Prices Online                       MEPS - World Carbon Steel Prices