EU
AVERAGE STAINLESS STEEL PRICES - LATEST FORECASTS FROM MEPS
Price increases announced by EU mills
during the previous month were successfully implemented. The
cold-rolled market performed better than the hot-rolled. Rising
alloy costs and nickel in particular contributed to a positive
sentiment for type 304. Whilst, this development was more or less
expected, the magnitude came as a surprise. The market was not ready
for the aggressiveness that mills demonstrated and low stock levels
forced customers to fully accept price increases and be mentally
prepared for further hikes. Type 316 products have evolved in a
different way. Molybdenum has fallen from record levels - thus
impacting on surcharge. In some cases transaction prices for these
grades have actually dropped.
Price discipline amongst the mills and lack
of import material point to further increases and so does the
influence of nickel, whose recent strength had already an impact on
alloy surcharges. Molybdenum shows increased evidence of weakness
which may lead to a further reduction of surcharges for 316 grades.
Stock levels are reported to be low and mills point to full order
books for the coming months. German construction has finally emerged
from a long-term decline but other key markets show weak growth or
even stagnation. Seasonal factors have created higher scrap prices
but this is likely to change in the second quarter 2006.
For the second half of the year we expect a
reversal of the positive trends with transaction prices being under
increasing pressure. Basis prices should remain at higher levels
than in 2005. The market sentiment suggests that, by the Summer,
stock levels will be relatively high and some import material will
be available from non-European producers. This should cause prices
to retreat. In addition, raw material prices, nickel in particular,
are forecasted to decline. Producers need to be careful not to raise
output substantially, as market forces may quickly switch again in
favour of customers.
