ASIAN AVERAGE CARBON STEEL PRICES - LATEST FORECASTS FROM MEPS

Financial problems across the region are expected to negatively affect demand over the coming months. This, coupled with weak export markets, will push transaction values for all flat products lower in the short term. De-stocking by distributors is forecast to continue during the final quarter. Consequently, mill sales volumes are likely to drop further. This may prompt local producers to further reduce selling offers in a bid to fill their depleted order books. The auto and construction industries are reported to be particularly weak, impacting heavily on cold rolled and coated figures.

Productions cuts by some mills in the region could help to stabilise the market by the end of 2008. A modest price revival is anticipated by the second quarter of 2009 as inventory rebuilding commences. However, low growth rates, predicted across many sectors next year, will limit advances in selling figures and could lead to reductions in the final few months of 2009.

Significant decreases in scrap and billet costs are predicted to lead to further declines in steel transaction values across all the long categories. Inventory levels are rising due to weakening demand. With fewer new projects anticipated over the coming months, consumption could continue to fall. This will prompt many customers to restrict purchases in the short term. Domestic mills are already cutting production in an effort to stem the downward price movement. However, this is unlikely to be enough to stop selling figures from drifting lower in the fourth quarter of 2008.

The current price cycle is forecast to reach the bottom early in 2009. Stability in scrap values is expected to return by this point, with possible rises in the first quarter. Distributors are likely to reassess their inventory levels, with a pick-up in buying anticipated after the Chinese New Year. Consequently, long products selling figures should move upwards towards the end of the first trimester. However, due to an uncertain global economy, a relatively modest upturn is anticipated.

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