NORTH
AMERICAN AVERAGE CARBON STEEL PRICES
- LATEST FORECASTS FROM MEPS
US demand for flat products is sluggish.
The Summer slowdown is likely to be more exaggerated than usual this
year. Delivery lead times are very short for the commercial grades.
Canadian buyers report a steady reduction in transaction values. The
market is extremely soft. Distributor business is very quiet with
resale prices causing concern.
The
MEPS Average Flat Products Price in June declined by $US40 per
tonne. This figure was greater than anticipated in our May forecast.
We predict further price decreases over the next six months in all
product categories. The customers are expected to continue their
inventory drawdown. Scrap costs are likely to slip further as
activity slows. Demand from the auto industry will be lower in the
second half. All these factors have prompted us to downgrade our
previous price forecasts.
We believe, however, that there is light at
the end of the tunnel. The flat products market should be more in
balance at the turn of this year. A slow but steady price
improvement should then develop into the Summer of 2006. Moreover,
prices should not fall to the lows experienced in 2003 - partly due
to the higher raw material costs the steel mills are required to
absorb. Furthermore, the next upturn is likely to be much more
modest because raw material shortages are not expected to occur on
the same scale as in 2004.
Over the past twelve months, bar and rod
prices have contracted at a much slower pace than most other product
classifications. The impact of lower scrap costs and no upturn in
construction activity has prompted us to downgrade our original
forecasts for the next twelve months. The market for structural
shapes is also slow and delivery lead times are shortening. Our
forecast for this product has also been downgraded.
We expect weak activity in this segment for
the next nine months. A significant pick up is not anticipated until
the Spring of 2006.
