Asian Steel Prices May See Short-Term Strength

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By Chris Shaw

Short-term the direction for steel prices in the Asian region is positive according to industry consultant MEPS, though it expects the price gains to only last through to about the middle of the year.

The group’s outlook reflects current solid levels of demand, which is giving producers some chance to lift prices on flat products in particular. It is the supply side that is likely to be the issue, as it notes new capacity in China is expected to come on-stream in the near-term.

This should put pressure on prices in the domestic Chinese market initially before flowing through into higher levels of exports through Asia and other markets, leading MEPS to forecast weaker prices in the second half of the year.

The group has a similar view on long product prices, expecting an upward short-term move as mills move to recover increased scrap metal costs by lifting prices in the short-term but a decline as the market enters its traditionally weaker summer period.

The main downside risk in the market in the group’s view is the potential for an oversupply situation to develop in the Chinese market, but it notes to date this doesn’t appear a serious threat.

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