ASIAN
AVERAGE CARBON STEEL PRICES
- LATEST FORECASTS FROM MEPS
We expect average flat product prices to
fall further next month and then continue at near that level into
January. Our previous forecasts have been downgraded as a result.
Cuts in output are taking place in China and most other major
producing countries. However, we believe that the current excess
inventories are unlikely to be dissipated until the end of 2005. A
modest price improvement is anticipated in February (after the
Chinese New Year holiday) in light of the probable improved
supply/demand balance. Furthermore, the effects of higher export
orders to North America and Western Europe should be filtering
through. The improved export performance is likely to continue
through the Spring and Summer of 2006. It is, however, possible that
a spate of anti-dumping cases could be brought against Asian
producers if export volumes become excessive. The price differential
between Asian and Western prices is sufficient to encourage higher
volumes of trade from oversupplied regions of the world.
The outturn for average long product prices
was marginally below our prediction last month. The current
oversupply situation in the region is expected to continue for the
remainder of this calendar year. In the Spring of 2006 export
volumes are likely to be higher - taking some of the pressure off
local markets. Furthermore, some output curbs will probably have
been put in place to ease the supply situation. These factors should
lead to a general improvement in prices for all products used for
construction to the end of the forecast period.
We cannot stress too much the importance of
restrictions in the growth of output on price developments in the
region. Supply in recent months has exceeded the rate of expansion
in demand. A hike in export volumes will only result in retaliation
by the receiving countries in the form of anti-dumping actions.
