WORLD AVERAGE STAINLESS STEEL PRICES - LATEST FORECASTS FROM MEPS

World average stainless selling values are forecast to move lower again in February. Rises in the EU and Asia are expected to be outweighed by falls in North America. Large drops in the US alloy surcharges of $US400 per tonne for type 304 and $US550 for grade 316 are anticipated. Gaps in distributor inventories in the West are expected to be replenished soon. However, uncertainty regarding the economic outlook for 2008 is likely to limit stock building. Transaction values in Asian should move up slowly over the coming months as output curbs begin to take effect. Weaker demand and reduced nickel costs should result in world transaction figures remaining significantly below previous highs. Grade 304 cold rolled coil prices are forecast to reach approximately $US4400 per tonne by the middle of the year, with type 316 values reaching almost $US7050 per tonne.

As predicted last month, the monthly average cash nickel value increased this month. Nickel stocks began to level out at the beginning of January before trending downwards during the middle of the month but climbed again over the last week. An imminent revival in the world stainless steel market should spur nickel prices to move higher in the short term. However, weaker demand for primary nickel from China is forecast for 2008. This, coupled with a difficult economic climate in the West, is unlikely to lead to values moving above the $US30000 per tonne mark. New capacity, due on stream later this year, could force prices lower during the final two quarters. As such, stainless transaction values are forecast to fall during the final two quarters - despite increased chrome, molybdenum and scrap costs.

The rise in stainless selling figures over the early part of 2008 is expected to be erased during the second half of this year. Oversupply in China is likely to cause exports from East to West to increase, once again. Reduced demand, as a result of a weaker world economy, could also add further negative pressure. Consequently, average prices this year are forecast to be lower than in 2007 - recording a decrease of approximately $US630 per tonne for type 304 cold rolled coils and almost $US700 per tonne for grade 316. These represent declines of approximately 13 and 9 percent, respectively.

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