WORLD AVERAGE STAINLESS STEEL PRICES - LATEST FORECASTS FROM MEPS

In the short term we forecast stainless steel prices moving even higher – due mainly to an unprecedented hike in the price of nickel on the LME during October. This gain will impact on transaction prices in December and January.

We believe that the turn of the year will be the peak of the current cycle. In the longer term, we expect stainless selling values to decline, albeit at a much slower rate than the escalation this year.

We are now anticipating the monthly average nickel cash price declining to near $US24,000 by September 2007, a month later than we previously predicted. Nickel prices appear to show no signs of any steep fall off as they have continued to stay above the US$30,000 per tonne mark throughout November. This could signal a soft landing in nickel prices next year. Nickel stocks are still extremely low and any small capacity problems can lead to another hike in the price on the LME, causing prices to climb even higher.

Global consumption is starting to show signs of slowing down. The Christmas period is also coming up in Europe and North America, and also the Chinese New Year is starting in the middle of February. This should be a period of lesser demand, which will ease the tight supply that has been seen in previous months. This will put pressure on the mills and as a result we should start to see an easing of prices after the New Year.

Source: MEPS - STEEL PRICES ON-LINE (regional steel price tables & forecasts)