ASIAN AVERAGE CARBON STEEL PRICES - LATEST FORECASTS FROM MEPS

In the flat products sector, recent changes to export taxes in China are expected to result in price advances over the coming months across Asia. The anticipated hike in iron ore and coal costs is also forecast to push regional transaction values higher. Domestic production cuts are expected to continue reducing inventories in Japan. This should help Japanese steelmakers lift prices in the second quarter. Asian average transaction figures for most flat products are forecast to reach new record highs by the middle of 2008. Cold rolled coil figures are not expected to move above the record peak due to weaker market conditions.

Excess capacity in China is expected to grow further as the year progresses. Lower demand from the EU and US is also anticipated due to economic slowdowns in these regions. This will exacerbate the oversupply problem further. As such, a downturn in Asian steel prices is forecast for the second half of 2008. However, smaller declines in hot rolled plate transaction values are predicted due to strong consumption from the energy and construction industries. Despite this downturn, 2008 average prices are expected to show significant gains over 2007 figures. Rises of between 3 and 18 percent are envisaged for the yearly average values across the product range. Coated coil prices are forecast to be at the bottom of this scale due to soft demand from the appliance and auto industries.

Large advances across all long products are forecast for the next few months due to rising scrap, energy and billet costs. Increases in the Chinese export tax should also lead to higher import prices in the short term across the region. Strong demand in South Korea and Taiwan is likely to result in prices moving up further in these two countries. However, Asian average prices should be tempered somewhat by low demand in China and Japan. Medium sections and merchant bar transaction figures should record more significant price growth due to strong consumption for these products. The MEPS - Asian long products average price is forecast to reach a new record high by the second quarter.

Selling values are expected to turn down in the middle of the year and into the third quarter. Seasonally lower demand and excess supply are likely to cause a dip in prices. However, transaction figures should hold up above current levels as mills attempt to pass on escalating input costs.

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