Steel Prices Jump Above Expectations

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By Greg Peel

The MEPS global all products composite price in May jumped by 5.4% compared to April. This was significantly above the expectations of the analysts. They estimate half the gain can be attributed to a fall in the US dollar against most major currencies, which is the second consecutive month that prices have been so affected.

MEPS expects this cycle to peak in October at similar prices to the high point in December 2004.

In the EU MEPS notes flat product restocking and extended mill delivery lead times which should push prices higher in the third quarter. Demand is also increasing in long products. The strength of the euro is adding to price increases.

In North America MEPS sees continuing higher prices through the year as supply is constrained and imports low. However a "significant" correction is on the cards for 2007.

Capacity increases in China are keeping Asian prices to a more modest level, notes MEPS. However steady increases are still expected for the remainder of the year. MEPS is expecting an all-products price increase of 15% to the end of 2006 over the start of the year.

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