NORTH AMERICAN AVERAGE CARBON STEEL PRICES - LATEST FORECASTS FROM MEPS

In the flat products sector, we forecast steadily rising prices for all North American product categories over the next six months. The mills have announced further price hikes in January despite not fully implementing their October proposals. We detect a positive sentiment in the US market. Inventories at the OEM's and distributors have steadily declined in recent months. The import threat is expected to continue to be minimal over the next two quarters. Moreover, the mills will be facing higher input costs for raw materials and are expected to attempt to recover these from customers in the coming months. The overall picture in Canada is likely to be less attractive but will not undermine the prospect of higher average prices in the near term.

The price upturn is forecast to extend into the middle of 2008 for all product categories. However, only modest gains are anticipated for electro-zinc coated coil. We foresee a probable halt to the price revival in the third quarter. A further slippage is anticipated in the final trimester. It is likely that the rising flat product prices in the first half of the year could start to attract foreign supplies. This could be particularly apposite in view of the prospect of over supply developing for hot and cold rolled coil plus coated coil in China. Plate is unlikely to suffer the same problems.

In the long products segment, scrap prices in North America are in decline. This is expected to translate into lower prices for all product categories over the next few months as Winter weather conditions stifle consumption. The negative impact will be least noticeable in the structural sections classification, with any decreases kept to modest proportions. Market conditions are dull for the remaining long products. During the first quarter of next year we forecast a turn round of the price scene as customers start to reorder in preparation for the revival of the building and construction sectors for seasonal reasons.

The long products' price improvement is likely to extend into the third quarter of next year. A price slippage is then predicted as orders on the mills decrease due to the onset of Winter.

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