EU STEEL PRICE FORECAST - FLAT PRODUCTS

The MEPS EU Average Hot Rolled Coil transaction price remained stable over the summer months. This was due to a lack of activity in the market, although orders are now starting to return. In the short term, values are not expected to decline because supply may tighten. However, no upward movement is anticipated during the fourth quarter due to occurrences of de-stocking in some member states.

In the New Year, Hot Rolled Coil figures are predicted to rise as mills attempt to pass on increases in raw material costs. In the second quarter of 2008 we expect the largest of these gains to be recorded as the anticipated upsurge in iron ore prices comes into effect. This could result in 2008 transaction values moving above those seen in previous peaks over the last 10 years. The threat of imports should also reduce further as the Chinese government continues in its efforts to curb exports. Next year could, therefore, be a record high for Hot Rolled Coil prices.

The MEPS EU Average Hot Rolled Plate transaction value has moved down marginally since July. This appears to be a minor slip caused by higher Chinese imports over the last two months. Transaction figures are still expected to continue on their upward path over the forecast period as demand remains strong and supply tight from most EU mills. Fourth quarter prices should, however, be relatively steady as elevated stocks work through the supply chain. In period two of 2008 we predict slightly higher price rises as the increase in raw material costs are added.

Source: MEPS - European Steel Review, MEPS EU Average Steel Price