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World average stainless steel prices - latest forecasts
By Jami Milnes, MEPS
May 7, 2008
Our forecasts have been revised upwards slightly as ferrochrome and scrap prices continue to soar. Further rises in transaction values are likely over the next two months as mills recover these escalating costs. Declining nickel prices will not be enough to offset the increases from the other alloying elements. Austenitic alloy surcharges gains in North America and Europe of between $US200 and $US535 per tonne over the next two months are predicted, with no significant drops anticipated until after the Summer holiday period. Stainless selling figures for cold rolled coil type 304 are expected to top $US4900 per tonne by the end of the second quarter, with type 316 values moving above $US7500 per tonne. The market outlook is uncertain from July onwards. Although, prices should remain high through the majority of the third quarter due to the increased raw material costs.
The April average nickel cash price on the LME will decrease by approximately $US2400 per tonne compared to March. Values moved between $US28000 and $US29000 for the majority of the month. Inventories in LME warehouses remain above 50000 tonnes. However, this appears to be having little impact on prices at present. Nickel values are expected to remain relatively stable next month. A downward trend is forecast from the end of the second quarter as economic worries have a negative impact on stainless demand and, therefore, production. This should lead to weakening nickel values as stockpiles begin to grow. The possibility of a strengthening dollar could also lead to profit taking and result in declining prices. Chromium and scrap costs are set to climb further in the short term, with prices remaining high throughout the course of 2008. Molybdenum figures are also expected to remain strong. Consequently, the fall in nickel is expected to be partially offset by rises in other raw material costs. Next year is likely to start positively as stainless activity increases.
Uncertainty in the financial markets has not, so far, affected stainless steel demand. However, as the economic outlook for the second half of 2008 grows more bleak, with the threat of a US led recession remaining high, consumption is likely to decline. Consequently, downward price pressure is expected to intensify as the year progresses. This, coupled with a decrease in nickel costs, is forecast to drive transaction figures lower. A revival in prices is then anticipated early in 2009 as distributors restock after the Winter drawdown.
 MEPS (international) ltd. is a leading independent supplier of steel market information.
For more information please visit MEPS website.
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