ASIAN HOT ROLLED CARBON STEEL PRICE FORECAST

The MEPS Asian Average Hot Rolled Coil price moved up again in May. This was in line with our expectations last month. In the short term we still see a possibility for further price strengthening as Chinese export prices move higher, due to the new export levy. However, figures are expected to reduce from the end of the third quarter onwards as oversupply sets in. New capacity, due on stream in China, is expected to put negative pressure on local prices. Export volumes are not predicted to fall significantly below 2006 levels, despite the introduction of new tax measures. Non Chinese values may, in fact, benefit from a slowdown in the growth of import volumes in the short term. Longer term, excess supply could lead to a steady decline in the average Asian value.

The MEPS Asian Average Hot Rolled Plate figure also increased this month due to tight supply and higher input costs. In the medium term, we expect values to remain firm as order books stay strong and import prices rise across the region from the Chinese tax levy. Prices are predicted to slip in the final quarter of 2007 but should not face the same downward pressure affecting Hot Rolled Coil. Strong overseas demand is likely to help keep any price declines relatively modest.                                                                                                           29.05.2007

Source: MEPS - International Steel Review - click here for a free sample copy.