ASIAN AVERAGE STAINLESS STEEL PRICES - LATEST FORECASTS FROM MEPS

Stainless selling values are forecast to slide again in August. Mills will remain obliged to concede the nickel decrease immediately to their customers in order to encourage orders from local buyers. Exports are still sluggish and expected to continue to be slow in the short term as the price in the west drops significantly due to alloy surcharge reductions. Overcapacity in the Chinese market is anticipated to intensify, putting further pressure on Asian selling figures. Planned production cuts are not likely to be enough to ease the dramatic stainless steel price falls predicted until the end of this year.

Nickel prices moved lower in July as they fell further into their deep descent. The July monthly average is set to be around $US8,500 per tonne below June's figure. Nickel values are forecast to continue falling and are anticipated to drop below the psychological $US30,000 per tonne mark for the August average as stocks on the LME continue to rise. There is still the possibility for another severe drop in the cost of nickel. Stability should return to the market later this year as production cuts from stainless steel producers over the Summer months bring supply and demand nearer into equilibrium. New nickel capacity due on stream later this year and in 2008 is expected to prevent values rising dramatically before the end of the forecast period.

The continued downfall in nickel prices should result in stainless transaction values, for all products, recording significant declines into the fourth quarter of this year. By the beginning of 2008, cold rolled coil type 304 prices are anticipated to slip below $US3,800 per tonne with grade 316 dropping to just near $US6,200 per tonne. The reduction in nickel prices is forecast to ease after the Summer, which should help to stabilise the stainless market by early 2008.                                                                                                                                         09.08.2007

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