MEPS - EU AVERAGE CARBON STEEL PRICE FORECAST FOR JULY 2004

BACKGROUND

Industrial activity in the EU remains weak and there are few signs of any real recovery in steel demand. Nevertheless, driven by a shortage of coke and tightness in slab supply, flat product prices remain firm. These high values have not yet resulted in any significant offers of imported material. Substantial reductions in scrap costs in recent months have now worked through into long product selling values.

FLAT PRODUCTS

The plate segment performed better than we anticipated in the latest negotiations. It is now likely that this robust pattern will continue into the final quarter and beyond.

We continue to forecast modest price increases for strip and plate in the next round of negotiations. These gains could well be rolled over into the following quarter for most product categories. However, decreases are still anticipated in the early part of 2005.

LONG PRODUCTS

Significant transaction price reductions occurred in July. For most products, the decline was €25/32 per tonne (between 4.3 and 6.3 percent). The figure for reinforcing bar was even greater at more than 15 percent. These decreases were associated with falls in scrap values. We expect scrap to move up in price over the next quarter. This could signal a recovery in negotiated values for structural sections and reinforcing bars in the near term.

We still anticipate a slow but steady price decline for all long products from the end of the year.

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