Global steel prices expected to peak before the year end
Jamie Milnes, MEPS:
World steel prices are currently at all time highs. Since August 2007, hot rolled coil average transaction values in North America have risen by almost $US600 per tonne. EU prices have moved up by approximately $US530 per tonne and Asian figures have advanced by more than $US350 per tonne.
MEPS estimates that the upturn in raw material prices for 2008 has been in the region of $US350 per tonne. Using this figure, western flat products producers have recovered more than their increased costs. Reduced imports from Asia, coupled with restricted output by some steel manufacturers, have created shortages in the market. Consequently, local mills were able to push through considerable price improvements. This was despite weakening demand in the industrialised nations.
Long products values also recorded substantial advances in all regions. Escalating scrap costs helped to propel prices higher. Strong demand from the Middle East redirected significant volumes away from western markets as selling figures rocketed in many of the Gulf states. European and Asian companies looked to export to this growing market in order to boost order books. Consequently, local supplies were restricted. This aided the mills' efforts for price advances. US values, however, suffered from declining consumption in the residential building sector.
Transaction figures are expected to continue climbing in September due to higher raw material costs. However, we predict that the latest increases will signal the peak of the current cycle in western countries as reduced consumption negatively affects demand on the mills. Low construction activity is expected to result in continued cautious buying by service centres. They also fear being left with overpriced material when values begin to fall.
The weakening economies in the EU and North America will, almost certainly, result in reduced demand in the near term from the manufacturing and building industries. Credit constraints are also expected to limit purchases, particularly from smaller customers. Consequently, selling figures are forecast to soften towards the end of the year.
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Jamie Milnes, MEPS:
Historic rises in EU steel prices despite slowing demand
EU steel prices are currently at record levels after meteoric advances through the first half of 2008. The MEPS hot rolled coil average transaction value has climbed by EUR 310 per tonne since the low recorded in January of this year. This represents an increase of approximately 65 percent, or almost $US500 per tonne at the current exchange rate.
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Jamie Milnes, MEPS:
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J. Milnes, MEPS:
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Jamie Milnes, MEPS:
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