NORTH AMERICAN AVERAGE CARBON STEEL PRICES - LATEST FORECASTS FROM MEPS

In the flat products sector, proposals for further substantial hikes have been made by North American producers. A large proportion of these advances are likely to be successful this month. Reduced availability as a result of low imports and higher export opportunities should help push through price rises. Scrap values have also moved up over the last four weeks. This is expected to give additional weight to mills' requests for increases in transaction figures. Further strengthening in the scrap market is expected in April with prices remaining firm in the short term. Consequently, transaction values for all flat products are forecast to climb to the middle of this year. The MEPS - North American hot rolled coil figure is predicted to top $US880 per tonne by the end of the second quarter.

Low consumption from end-users, as a result of the weakening economy, is expected to have a negative impact on steel prices during the second half of 2008. Record high figures over the Summer are likely to cause import volumes to increase once again. Significant falls are, therefore, forecast for the final few months of the year for strip mill products. Hot rolled plate values are likely to hold up better due to strong demand, particularly from the energy and agricultural sectors. A modest improvement in the average flat products price is likely early in 2009.

In the short term, long products prices are expected to follow scrap higher. However, import volumes, expected to arrive shortly, should help to alleviate the pressure on supply for some categories. Reasonable levels of inventory are likely to result in reduced buying from distributors as values reach their peak. As a result, May is predicted to be the pinnacle of the current cycle, with the MEPS - North American long products price topping $US810 per tonne. Economic concerns should prevent wire rod figures from moving up further, despite the predicted rise in scrap costs this month.

Transaction figures for all long products are forecast to move downwards in the second half of the year. Current prices are likely to attract further imports, alleviating tight supply. Demand on the mills is expected to slow towards the end of the year with a considerable drop in end-user consumption predicted for 2008. A pickup in selling values is then anticipated for the first quarter of 2009 as distributors look to rebuild inventories after the Winter lull.

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