The MEPS Global Steel Price in February
fell by almost one percent in February. This was broadly in line
with our prediction last month. The minor difference was the result
of strengthening currencies in Canada and Asia, partly being offset
by a depreciation of the Euro against the US dollar. The MEPS twelve
month forecast has been slightly uprated this month due to improving
market conditions in some regions and the start of a cycle of
inventory building in the EU market.
Improved steel demand across the region is
forecast to result in higher prices for both long and flat products
in the short term. The threat from substantial import volumes has
not yet materialised and is not likely to impact on prices until mid
year. The EU average all products price is, therefore, not likely to
rise in the second half of 2006, despite an end to the inventory
drawdown in the region.
Our forecast figures over the next few
months have been uprated from the January predictions. This is
because the threat from imports has yet to fully materialise. As a
result, price levels over the year are now expected to be higher
than previously anticipated by approximately 2 percent. It is
noteable that we forecast prices in January 2007 at levels below
those at the start of this year despite the strong likelihood of
improved consumption in the region.
The Asian all products average price
forecast this month is little changed from our predictions in
January. We still believe that selling values to improve as the year
progresses. The gain is likely to be quite modest. We do not expect
the current oversupply in the region to reduce significantly over
the year. However, the demand side should improve from the current
low level after the Chinese holiday season. We should point out that
the possibility exists that the mills in China continue to increase
output at a faster rate than the rise in domestic consumption. This
has not been built into our Asian forecast.