AMERICAN AVERAGE CARBON STEEL PRICES
- LATEST FORECASTS FROM MEPS
The North American flat products price fell
by 5.5 percent in May. This was substantially more than our
expectations when we prepared the last forecast. An inventory
overhang continues to plague the market and has put extreme pressure
on steel selling prices.
It is now clear that the stock levels
throughout the supply chain were higher than was being admitted
earlier in the year. Moreover, they are being unwound at a much
faster rate than previously envisaged as customers are placing
orders only to fill gaps in their inventories. The price trends for
the commercial grades of plate are coming into line with strip mill
products - partly as a result of strong import pressure.
We forecast further price deterioration in
negotiations up to the end of the year. Demand is not likely to pick
up over the next six months. The inventory depletion phase is
expected to last until near the year end. We anticipate an upturn in
prices as the Spring approaches in 2006.
The North American long products price in
May held up slightly better than we envisaged. This was the result
of the increase in scrap surcharges compared to the previous month,
the seasonal pick up in real demand and inventory reduction.
The scrap surcharge is likely to decrease
once again in June. Consequently, our forecasts for the four main
long product categories to May 2006 remain virtually unchanged from
the previous month's figures. A steady decline in transaction values
is anticipated for wire rod, structural sections and merchant bars.
A seasonal upturn for reinforcing bars is likely soon.