WORLD AVERAGE STAINLESS STEEL PRICES - LATEST FORECASTS FROM MEPS

Our forecasts are little changed from January. Rising raw material costs are expected to push world stainless steel selling figures higher in the short term, with increases predicted in all three regions. US and EU mills will attempt to implement basis hikes over the next few months as they try to move back into profit. We believe that these initiatives will be, at least partially, successful. Sales volumes from both distributors and end-users are likely to grow as many customers purchase ahead of further price gains. Planned maintenance outages at some mills, coupled with production cuts in the west, will, almost certainly, help to alleviate oversupply pressures in the market. This should boost transaction values during the second and third quarters of 2010.

The nickel monthly average cash figure is expected to be approximately $US19000 per tonne in February. Daily figures climbed above $US20000 per tonne for the first time since August 2009. Stock levels held in LME warehouses fell continuously through most of the last four weeks. Mine strikes affected supply of the metal. Stainless steel demand also improved recently. This should help to boost nickel values in the short term but inventories remain at very high levels. In addition, the US dollar has started to rise, putting negative pressure on commodities traded in this currency. Consequently, only modest nickel price gains are anticipated over the coming months. Oversupply issues are then expected to put negative pressure on values during the second half of 2010.

World stainless steel demand is likely to grow by 10 percent in 2010. However, the economic recovery will remain fragile in many countries due to limited access to credit. Consequently, mill sales volumes are expected to stay below previous maximum levels. Oversupply could become a feature of the market, once again, when new capacity comes on stream later in the year. This is forecast to put downward pressure on prices in the final trimester. Nevertheless, higher raw material costs should help to support prices over 2010. An upturn in selling figures is then predicted for early in 2011.
 

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