EU AVERAGE STAINLESS STEEL PRICES - LATEST FORECASTS FROM MEPS

Stainless selling figures are forecast to decrease further in October. Declining nickel costs, together with large drops in scrap values will, almost certainly, push alloy surcharges for austenitic grades lower. Basis numbers are also expected to sustain negative pressure in the short term. Consequently, transaction prices are likely to continue on their downward path through the fourth quarter. This is not good news for distributors and stockists as this would cause the value of their inventory to reduce. Therefore, distributors are expected to limit purchases, especially with year end financial reports drawing near.

As predicted, the monthly average nickel price declined during August and continued to slide significantly in September. A sizeable decrease in austenitic alloy surcharges is, therefore, anticipated for November - exacerbated by large falls in scrap costs. Nickel inventory levels held in LME warehouses soared to a nine year high as consumption from the stainless steel industry dropped considerably over the summer break. Nickel values are forecast to decline further in the short term as demand remains low. Deteriorating economic conditions could cause an even sharper correction. A seasonal upturn in consumption is expected during the first quarter of next year. This is likely to result in a modest revival in nickel prices. However, we believe cash figures will remain below $US20000 per tonne over the forecast period due to a lack of confidence in the market.

Stainless transaction prices are predicted to stabilise by early next year, with values for type 304 cold rolled coil slipping below €2300 per tonne and grade 316 prices. Credit restrictions should ease early in 2009. Customers will then be re-assessing their stock levels. However, recent nickel price falls, coupled with economic uncertainty, may cause both distributors and end-users to remain cautious. Consequently, a large inventory build is unlikely to occur. However, a potential upturn in consumption is forecast to lead to a modest revival in transaction figures during the second quarter of 2009.

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