WORLD AVERAGE STAINLESS STEEL PRICES - LATEST FORECASTS FROM MEPS

Transaction prices for grade 304 products are forecast to decline further in the short term due to falling raw material costs. Type 316 figures are expected to record a substantial drop of approximately $US1700 per tonne in the next few months as molybdenum values plummet. Consequently, customers are likely to wait before committing to new purchases. The value of inventory currently held by service centres will be significantly affected by the decrease. As such, many distributors are likely to attempt to offload as much material as possible before the year end, perhaps at prices considerably below mill offers. Production cuts by the steel makers could help to limit the oversupply.

The monthly average nickel cash value is likely to drop again in November 2008 as daily figures struggle to rise above from the $US10000 per tonne level. The main constraint for price is the high inventory held in LME warehouses, which continued to rise over the past four weeks and now stands at above 60000 tonnes. This will add further downward pressure in the short term. Many small and medium sized producers claim that current prices are too low to cover costs. Some have been forced to halt production. These supply cuts could help to stabilise nickel prices. A modest recovery in cash values is expected for the first half of 2009 as a result of a pick up in world stainless steel demand on the mills. Nickel prices could then begin to fall, once again, as consumption weakens over the summer 2009.

Production restraints by mills in all regions could lead to a supply shortage early in 2009. Distributors may then increase purchase volumes during the first quarter. Falling chromium costs should be offset by rises in nickel and scrap values. This is predicted to push stainless prices upwards during the first half 2009. However, due to the ongoing economic crisis and credit restrictions, these advances are forecast to be only modest. Grade 304 selling figures are unlikely to move much above current levels. Due to the severe drop in molybdenum costs, type 316 prices for both hot and cold rolled products are expected to remain below November 2008 values. A downturn in transaction values is then envisaged in the final quarter of 2008.

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