NORTH
AMERICAN AVERAGE CARBON STEEL PRICES
- LATEST FORECASTS FROM MEPS
In the flat products sector, the impact of
higher import volumes will not be significant until later in this
quarter when negotiations for the second trimester are undertaken.
However, next month, the mini mills will be under severe pressure to
reduce transaction values because substantial reductions in the
scrap surcharge are proposed under the current system. It will be
difficult for them to increase basis prices by an equivalent amount.
Real demand should be fair in both Canada and the US through 2006.
However, we expect the current tight supply situation to be
transformed into excess as imports flood in during the second and
third quarters.
We maintain our predictions of steady price
erosion in this region for the next nine months. The rate of decline
is not likely to be as savage as in the period September 2004 to mid
2005. The price decrease will be most pronounced in the supply of
commercial grades, which can readily be produced by Asian mills and
require the minimum amount of certification and testing. Prices for
the superior grades should hold up better than standard
specifications.
Demand for long products should be
reasonably firm across the region throughout 2006. Nevertheless,
price decreases are likely next month as scrap surcharges decline in
the US. Further reductions are probable for the wire and bar
products over the following few months due to a rise in import
volumes and high inventories. Later in the year we expect prices to
move up marginally as consumption increases outstrip the escalation
in imported material. This, however, is heavily dependent upon the
actions of Chinese producers who may oversupply the Asian market,
forcing mills in some countries to try to export their excess.
