WORLD AVERAGE STAINLESS STEEL PRICES - LATEST FORECASTS FROM MEPS

EU and US basis numbers are expected to strengthen over the coming months as demand on the mills increases. Producers are already receiving some orders for the first quarter of 2008 deliveries as distributors look to replenish inventories. Customers are expected to re-evaluate their stock levels early in the New Year which should encourage further buying during the first half of 2008. High inventories and low demand remains a feature in some areas of the Asian market. This is likely to slow the upward price movement in the region. However, capacity cuts by mills in China and Japan are expected to avert declines in the Asian average. Transaction prices are, therefore, forecast to rise steadily through to next summer.

The nickel market remains uneasy, with inventories continuing to climb. Stock levels reached a seven year high this month, finally topping 40,000 tonnes. As such, the nickel cash price dropped by over $US5000 per tonne during the last two weeks of November. This should result in the monthly average figure being little changed from October. A decrease in the average value is expected in December, although daily cash figures are forecast to move up. Nickel prices are still forecast to rise in the first half of 2008 as stainless producers return to the market. However, LME values are likely to fall in the second half of next year due to a growth in nickel supply and seasonally lower stainless demand. High chrome and molybdenum prices are also affecting the alloy surcharges and these are expected to rise or remain high throughout 2008. Type 316 products could be harder hit by these escalating costs, with some customers looking to alternatives.

We predict that exports from East to West will remain at low levels in the short term as demand in the EU and US continues to be subdued. Lower nickel prices, coupled with a weaker global economic climate, are forecast to result in peak stainless selling values falling short of those recorded during 2007. The world average type 304 cold rolled coil figures are, therefore, forecast to move above $US4900 per tonne by next summer. Grade 316 should top $US7700 per tonne. Prices for both products are expected to fall through the final quarter due to oversupply in the market. Asian average prices will almost certainly move below those in the other two regions by the beginning of the second quarter of 2008.

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