Commodities | Mar 06 2008
By Chris Shaw
As input costs continue to rise steel producers have been able to pass on these increases to customers, with industry consultant MEPS noting its global All Products average price has risen to a new all time high this month as a result.
The group estimates prices have risen by US$55 per tonne or more than 7% in the past month, supported also by increased demand at the mills as buyers move to place orders ahead of further potential cost-based increases in transaction values.
Given the pace of the latest increases MEPS has lifted its price forecasts for the coming year, with average prices expected to push through US$830 per tonne by the middle of the year before some modest slippage in the second half on the back of weakening order books as economies slow down.
While this should produce some oversupply in Asia in particular MEPS’s view is prices will stay above the levels seen last year given the ability of mills to pass on their higher raw material costs. In Europe the group has also lifted its forecasts to reflect the higher than expected outcome for iron ore price negotiations, with much of the increase likely to be seen in the next few months.
The group’s numbers show prices in six out of nine products likely to hit new highs in the June quarter, bringing the All Products average price to a record by April. While some de-stocking is expected later in the year given a slowing of economic growth in the region the increase in raw material costs are expected to keep prices above 2007 levels.
In the North American market the group expects prices to move above US$840 per tonne in the June quarter as prices rose in every product category last month but as with Europe a slowdown in economic activity will see prices slip slightly in the second half of the year. A similar outlook is expected in Asia but the group sees prices rising only to around US$760 per tonne in the second quarter given some oversupply issues.