ASIAN
AVERAGE CARBON STEEL PRICES
- LATEST FORECASTS FROM MEPS
In the flat products category, we still
cannot see any short term solution to the chronic over supply
situation in the region. Production cuts have been made in Japan,
South Korea and Taiwan. However, more action is needed in China to
redress the imbalance between supply and demand. This may be
partially achieved by higher export volumes to the North American
and EU markets. Significant price cuts are anticipated in January.
The only positive note on pricing in Asia is that the rate of
decline should ease and a modest upturn in prices is possible in the
second half of 2006. We believe that drastic action to curb output
growth will be taken in China during the first half of this year.
Moreover, higher export activity will ensue from all the main Asian
steel producing countries.
Recently reported price reductions have not
been fully incorporated in our forecasts. The balance of
probabilities lie at 80:20 that our predictions will be on the high
side. The rate of decline could be faster and deeper - given the
projected spate of price cutting in the region.
The short term outlook for prices in the
long products sector remains rather poor. Values are forecast to
slip further over the next few months in all product categories as
oversupply blights the markets. Higher export volumes and further
cuts in production should, however, stabilise the situation in the
Springtime. A slow but modest price improvement is anticipated
through the Summer months and into the remainder of the year.
Regulation of supply is essential in China.
We do not anticipate major cuts in output in 2006 but we do expect
the rate of growth to be reduced to levels significantly below the
2005 outturn.
