COMPOSITE  STEEL PRICES - LATEST FORECASTS FROM MEPS

WORLD (GLOBAL) - ALL PRODUCTS COMPOSITE CARBON STEEL PRICE

The MEPS - Global All Products average price jumped by approximately $US55 per tonne (7.6 percent) to a new all time high this month. Substantial rises were recorded for the majority of flat and long product categories as sizeable hikes in raw material costs were passed to customers. Demand on the mills also went up as buyers placed orders ahead of probable further rises in transaction values.

With such rapid increases in input costs we have decided to upgrade our forecast for the next twelve months. Further but more modest gains are predicted for both flat and long products up to the middle of the year. This should result in the MEPS figure climbing to in excess of $US830 per tonne at that time. Weakening order books from slowing economies are expected to lead to a degree of price slippage in both the flat and long product categories later in the year. This is likely to be exacerbated by oversupply in Asia and rising import volumes into the EU and North America. However, the annual average price in 2008 will be substantially above the 2007 figure because the mills will have passed on their higher raw material costs to customers.

EU - ALL PRODUCTS COMPOSITE CARBON STEEL PRICE

The MEPS - All products EU average price increased significantly in February, rising almost €40 per tonne (7.2 percent). Escalating input costs and supply shortages caused values to climb faster than previously foreseen. Our forecast has been revised upwards as a result of the higher than anticipated iron ore settlement. Significant gains are expected over the next few months as mills try to recover rising raw material prices. Transaction figures for six out of the nine products are forecast to reach new record highs early in the second quarter. This is predicted to push the MEPS - All products average price to a record by April 2008.

Slowing construction activity and growing concerns over the economic outlook are expected to result in price weakness from the second quarter onwards for most products. A slowdown in steel consuming industries will almost certainly be recorded, impacting on end user demand. Distributors, building inventories ahead of the upcoming price increases, are likely to reduce buying as market activity declines. De-stocking is anticipated after the Summer. However, due to increased raw material costs, values should remain considerably above the previous low figures.

NORTH AMERICA - ALL PRODUCTS COMPOSITE CARBON STEEL PRICE

The MEPS - All Products average price jumped by approximately $US80 per tonne to a new all time high this month. Substantial rises were recorded in all flat and long product categories as hikes in raw material costs were passed to customers. Demand on the mills also increased as buyers placed orders ahead of a probable further jump in transaction values.

With such rapid rises in input costs we have decided to upgrade our forecast for the next twelve months. Further but more modest gains are predicted for both flat and long products up to the middle of the year. This should result in the MEPS figure climbing to in excess of $US840 per tonne at that time. Weakening order books from a slowing economy, coupled with anticipated rising import volumes are likely to lead to a degree of price slippage in both the flat and long product categories by the end of the year. However, the annual average price in 2008 will be substantially above the previous year's figure because the mills will have passed on their higher raw material costs to customers.

ASIA - ALL PRODUCTS COMPOSITE CARBON STEEL PRICE

The MEPS - All Products average price increased by approximately $US40 per tonne to another all time high in February - the seventh consecutive monthly gain. Substantial rises were recorded in all long product categories as hikes in raw material costs were passed to customers. More modest improvements were noted in the flat products segment. Demand on the mills also went up as buyers started to place orders ahead of probable rises in transaction values.

With significant increases in input costs we have decided to upgrade our forecast for the next twelve months. Further but more modest gains are predicted for both flat and long products up to the middle of the year. This should result in the MEPS figure climbing to approximately $US760 per tonne at that time. Weakening order books from oversupply in the region is likely to lead to a degree of price slippage in both the flat and long product categories up to the end of 2008. However, the annual average price in 2008 will be substantially above the previous year's figure because the mills will have passed their higher raw material costs to customers.