EU AVERAGE STAINLESS STEEL PRICES - LATEST FORECASTS FROM MEPS

Alloy surcharges for austenitic grades are set to move up significantly in September. This could restrict the ability for local mills to push through further basis price rises. Indeed, basis numbers may come under negative pressure as a result of the anticipated jump in transaction figures. Stainless steel production is likely to grow over the coming months. This could create oversupply in the market if mills bring capacity back on stream too quickly. End-user consumption is also expected to remain low for the remainder of 2009. Consequently, some price slippage is forecast for the final quarter of 2009. A drop in nickel costs could add to the downward movement over this period.

Daily average cash nickel values on the LME soared over August, temporarily breaking through the $US20000 mark. These gains appeared to ignore market fundamentals. LME stock levels moved back above 110000 tonnes, despite the ongoing strike at the Sudbury nickel mine and rising demand due to stainless steel production. Investors speculated further as Chinese buyers continued to stockpile the metal. The monthly average figure is set to increase by over $US3500 per tonne in August. However, concerns regarding underlying demand resulted in numbers slipping recently. Weak fundamentals and economic uncertainty could result in sustained price falls in the short term. Oversupply is likely to continue over the next few months. Chinese imports are also expected to slow in the second half of 2009. Consequently, we still believe that nickel values will decline in the fourth quarter of 2009. However, further speculation by funds could keep prices high. Restocking by stainless steel distributors may help to limit some of the declines. A stronger recovery is then forecast for the beginning of 2010. A healthier world economy, coupled with easier access to credit, should lift cash nickel values throughout the first two quarters of 2010.

Government stimulus projects are likely to boost stainless demand by the beginning of 2010. A rise in consumer spending could also help to improve consumption, particularly in the appliance sector. This should give distributors more confidence to further their inventory rebuilding plans. Consequently, we forecast the price recovery to resume early in 2010 with advances predicted to continue up to the summer.
 

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