EU AVERAGE STAINLESS STEEL PRICES - LATEST FORECASTS FROM MEPS

MEPS forecasts are little changed from November. Austenitic selling figures are expected to fall in the New Year due to a reduction in the alloy surcharges. Further cuts in basis numbers can not be ruled out due to weak end-user demand. Several European stainless producers are extending their Christmas stoppages into the middle of January and many will restrict production over the next few months. This should help to alleviate oversupply pressures in the market and lift transaction values by the end of the first quarter.

The monthly average cash nickel value was set to fall marginally in December 2009. Over the last three weeks, LME inventories have moved above 150000 tonnes. There is a strong possibility that stock levels will continue climbing in the short term due to poor stainless steel consumption. Despite the weak fundamentals, we believe that nickel prices will rise in January. Fund re-weighting will, almost certainly, put upward pressure on nickel values. Optimism in the market is likely to grow during 2010, from expectations of escalating Chinese demand. This should push prices higher during the first half of 2010. However, oversupply issues are likely to persist over the next twelve months. Consequently, cash nickel figures could slip during the final few months of the forecast period.

Re-stocking by the distributors could boost sales volumes during the first half of 2010. This, coupled with rising raw material costs, is expected to push stainless steel prices higher through over the same time span. However, real consumption is unlikely to recover significantly over the forecast period. Demand from the automotive sector is likely to soften when government car scrappage schemes come to an end. Consequently, transaction values could slip during the final quarter of next year. We predict price rises for austenitic coil and plate of over 20 percent in the period to the end of the summer. As a consequence, average austenitic coil prices in 2010 are expected to be 25 percent above the median in the previous year. The increase for plate is likely to be 20 percent.
 

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