EU AVERAGE CARBON STEEL PRICES
- LATEST FORECASTS FROM MEPS
Most first quarter business in the flat
products sector has been completed. We envisage no major changes
next month. Any movement in the balance of trade is not likely to
become apparent until the start of the second trimester.
We still believe that local consumption
will continue at the level in the previous year. There are prospects
of a marginal improvement now that the stock overhang has been
largely reduced. However, an increase in the volume of third country
imports entering the region in the second and third quarters of the
year will most likely, offset any price benefits which may have
accrued in recent months. Consequently, we maintain our forecast
that transaction values will drift lower into the Autumn. Towards
the end of 2006 the global oversupply situation should ease as
Chinese mills reduce their rates of growth in output to more closely
match domestic demand.
Demand for most long products will remain
sluggish due to the difficult Winter weather conditions. We,
therefore, still anticipate further transaction price slippage in
Euro terms over the next few months with a modest revival up to the
end of the Autumn period in both steel consumption and pricing. The
low priced long product categories are less affected by the threat
of Asian imports. High freight costs mitigate against transporting
low margin products for construction from the Asian continent. As
Winter approaches in 2006, we expect a fall in prices as demand
slips away again.
