NORTH AMERICAN AVERAGE CARBON STEEL PRICES - LATEST FORECASTS FROM MEPS

Transaction values for all flat products are forecast to decline again this month. Deteriorating economic conditions are likely to cause demand from many end-user segments to weaken further. The addition of the normal winter slowdown could result in extremely low mill order books by the end of the year. Consequently, local producers will, almost certainly, have to reduce offer prices in order to attract increased purchases from customers. However, domestic mills are likely to cut production in order to help buoy steel transaction values.

Steel price declines are forecast to continue into the beginning of next year. However, smaller decreases are predicted in the plate category as strong consumption in the rest of the world should limit import quantities into the domestic markets. A modest revival in transaction values is then predicted for the second quarter. Increases in raw material costs in 2009 are likely to encourage the domestic mills to implement price advances. However, we do not envisage another round of substantial hikes due to slower growth rates in steel consumption across the region.

Growing weakness in the non-residential building sector is predicted to result in lower than normal demand for long products during the fourth quarter. Distributors are not expected to build inventories in the run up to the end of the year. Consequently, sales over the next few months are forecast to be at low levels. This, coupled with a large decline in scrap values, will, almost certainly, force domestic mills to reduce steel selling figures for all long products, particularly for the reinforcement products. Production cuts by some US producers may limit the falls, but are unlikely to prevent the downward trend. Smaller decreases are envisaged for medium sections and beams due to tighter supply in the market.

Deteriorating economic conditions could delay a rebound in steel prices but a modest recovery is anticipated for the first half of next year. A small increase in raw material costs is expected during 2009. Consequently, mills will, almost certainly, attempt to push through steel price advances.

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