NORTH AMERICAN AVERAGE CARBON STEEL PRICES - LATEST FORECASTS FROM MEPS

The MEPS - North American Average Flat Products transaction value decreased by over $US30 per tonne in November, reversing the previous upward price trend. Cold rolled and coated selling figures plummeted by approximately $US40 per tonne in November, despite rising demand from the automotive sector. A similar fall was recorded for hot rolled plate. A slightly smaller reduction of almost $US25 per tonne was noted for hot rolled coil. Local mills were unable to hold onto the recent price hikes due to poor end-user demand. However, energy and water transmission projects remain healthy.

Transaction numbers for all flat products are forecast to move lower in December 2009. Consumption levels are likely to remain poor over the winter period. Rising crude steel production could add further downward price pressure as market supply increases. Many companies will also hold off making new purchases in the run up to the year end for tax reasons. Selling figures are then expected to stabilise early in the first trimester of 2010.

End-user demand is likely to grow during 2010 as the US economic climate strengthens. The recent introduction of discounts for energy efficient appliances in the US could help to boost sales of cold rolled and coated categories. This, coupled with an anticipated rise in raw material costs for 2010 contracts, should push up steel prices for second quarter deliveries. Transaction figures are forecast to climb through to the end of the summer of 2010 from a low point around the turn of the year. Oversupply could limit the size of the improvement.

The MEPS - North American Average Long Products transaction numbers slipped again in November, dropping by almost $US10 per tonne. Rebar selling figures recorded a larger decrease of approximately $US20 per tonne in November. Falling scrap values put downward pressure on steel prices. End-user demand remained lacklustre. Poor US residential construction activity continued. Mesh grade wire rod values held steady as recent mill closures helped to tighten supply for this category.

Domestic producers have announced that they will offset recent decreases in scrap costs with a basis rise in December 2009. However, mill sales are expected to stay poor due to traditionally weaker consumption through the winter. Consequently, further declines for all long products are likely in the short term. Steel selling figures could then stabilise in the New Year as customers look to refill gaps in their inventories.

Rises in iron ore and coking coal values are anticipated for 2010 contracts. Scrap costs are expected to climb as a result of these increases. This will, almost certainly, spur long products prices higher by the second quarter. Moreover, growing confidence in the economy should help to lift sales of steel intensive products. However, the recovery across many industries, particularly the construction sector, is likely to be slow. Consequently, price advances could limit the amount of the advances.
 

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