MEPS - NORTH AMERICAN AVERAGE CARBON STEEL PRICE FORECAST FOR JULY 2004

BACKGROUND

The Canadian currency appreciated against the US dollar by 2.6 percent in the period to July 2nd 2004. This had an impact on average prices in the region. In the US, several mills are planning melting and rolling outages to repair and refurbish equipment for flat products production in the Summer. In Canada, local strip mills are operating tonnage allocations. In the long products segment, both US and Canadian transaction values in July were rolled over from the previous month.

FLAT PRODUCTS

The tightening supply scene, in the US strip mill sector, was the major cause of recent price hikes. Higher volumes of imports will not substitute for domestic mill shortages in the immediate future.  Lack of imports is keeping the plate segment in shortfall. The US market is strong and, therefore our forecasts for this product are uprated.

Despite the strong market conditions in the region we still believe that the boom conditions will last only until the end of the year. A reduction is anticipated when foreign producers recognise the attractive nature of the North American outlets and build up their supplies to the region.

LONG PRODUCTS

Our latest forecasts are in line with the previous figures. Wire rod and rebars are in excess due to high import volumes. The sections and merchant bar markets are quite strong and currently less affected by foreign supplies. Scrap prices are increasing.

We do not anticipate any upward transaction price movement in the near term. In 2005, we expect a slow but steady price decline for all products.

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