Commodities | Nov 03 2006
By Chris Shaw
According to steel industry consultant MEPS the global steel market is likely to be a tale of two regions in coming months as prices for flat and long products should increase in Asia but fall globally.
The group suggests this is likely as in Asia the impact of China is being muted as its supply and demand position is broadly in balance, while Japan is maintaining an orderly market by limiting supply. At the same time, it points out weaker conditions in Korea are being offset by strength in Taiwan, so the group suggests both flat and long product prices should move higher by the end of the year and into 2007.
While flat product prices in European and US markets are likely to be stable this month MEPS sees prices globally falling significantly in coming months as global supply is currently in excess of demand. This trend will offset the stability in Asian pricing.
The group estimates flat product prices could fall as much as 6.5% from current levels, though the situation should stabilise by the middle of 2007 as output curbs help bring the market into better balance.
MEPS suggests the 3% fall in long product prices in October is a good indicator of the likely trend in coming months, particularly as imports to US and European markets are likely to stay high.
Again, any upturn is not expected until the second half of 2007 as MEPS estimates it will take until then for regional import and export activity to return to more normal levels, so addressing the current imbalances.