COMPOSITE  STEEL PRICE - LATEST FORECASTS FROM MEPS

WORLD (GLOBAL) - ALL PRODUCTS COMPOSITE

The MEPS Global Steel Price in April jumped by 3.5 percent. Market sentiment has changed in the past six weeks. Planned and unplanned outages have led to the fear of shortage for many products. Customers have increased their order patterns in an attempt to lift their inventories as a hedge against late deliveries. Stronger market conditions have also lifted scrap costs. We now forecast quite sharp rises in steel selling values in the short term. The peak is anticipated in the third quarter of the year at around 9 percent above current values. This is likely to be followed by a steady decline as customer orders fall away when the mills satisfy orders on hand.

EU - ALL PRODUCTS COMPOSITE

The likely impact of Asian and other regional imports on EU prices has not materialised. Across the world many mills have key plants out of service - some planned some unplanned. The fear of a shortfall in deliveries has prompted customers to increase their volume of orders. This has enabled the mills to push up prices. We believe that this situation will continue into the Autumn,. A price decline is then forecast as a degree of oversupply develops when steelmakers catch up on orders. The zenith in this cycle is predicted to be at least 12 percent above existing figures when measured in US dollar values.

NORTH AMERICA - ALL PRODUCTS COMPOSITE

High levels of imports has not impacted on steel prices because supply from local mills has been kept in check through maintenance programmes and the prospect of reduced import volumes - particularly after the accident at CSN in Brazil. We detect negative customer sentiment about steel availability in the short term. Domestic mill order books are booming and supply shortfalls are a genuine prospect. Prices are now forecast to rise by approximately 6 percent over the next six months.

ASIA - ALL PRODUCTS COMPOSITE

Many Asian mills are regulating output in an effort to stop prices falling. Improvements can be seen in China and Taiwan, with isolated gains in South Korea and Japan. We expect this situation to continue with prices rising in the rest of the world over the next six months. Gains of around 8/9 percent are forecast over the period to September/October in Asia. A modest decline is anticipated to the end of the forecast period. We envisage a significant improvement in real demand over the next year in this region. Export volumes are likely to expand from the final quarter of 2006.

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