Commodities | Apr 11 2006
Increasingly the steel market looks to be a market in two halves, with prices expected continuing to strengthen in coming months before weakening later in the calendar year.
Industry consultant MEPS is one to support this view, suggesting the recent price increases by mills in the EU, driven to some extent by rising input costs, were successful due in large part to low stock levels and an aggressiveness on the part of the mill owners that caught consumers by surprise.
MEPS suggests further price rises are possible in the next few months, particularly as the strong nickel price has pushed up alloy surcharges.
The second half of the year sees a different story unfolding though, as MEPS notes there will be a new range of pressures coming to bear on steel prices, though base pricing levels should remain above those seen last year.
These pressures include higher stock levels, partly as a result of an increase in the quantity of imported steel as Asian producers in particular look for new markets for their output.
At the same time MEPS suggests raw material prices may begin to weaken, which should flow through into lower prices for end products.
In the view of MEPS pressure will switch to the producers in the second half of this year, as they will need to maintain production discipline if they want to keep prices at reasonable levels.