Commodities | May 08 2008
By Chris Shaw
Higher coking coal prices are good news for steel prices and industry consultant MEPS has responded by lifting its price forecasts for all flat products. The group also notes prices are being pushed higher by higher scrap metal prices and ongoing tightness in steel markets, a situation it expects will continue through to the middle of the year.
On the flip side it notes buyers are trying not to speculate given the current high prices, meaning ordering is being kept to a minimum at present. While this may help limit the price increases to some extent the group is forecasting hot rolled coil prices in Asia to hit US$975 per tonne by the end of the June quarter.
Such a level may not last though as there are expectations of a slowdown in global economic actvitiy driven by a recession in the US, so if this pulls back demand as expected the group sees steel prices drifting lower in the fourth quarter of the year.
For long products MEPS expects further price increases in coming months but to then stabilise from the middle of the year, leaving prices in the order of US$237-$293 per tonne higher than the lows recorded in December of last year.
The group’s stainless steel price forecasts have also edged higher on the back of higher scrap and ferrochrome prices and with mills attempting to recover these cost increases further gains are expected in coming months. Cold rolled coil type 304 is forecast to sell for more than US$4,900 per tonne by the end of the quarter, while type 316 prices are predicted to move above US$7,500 per tonne.
Prices may decline later in the year though if the US economy does force a slowing in global growth and with nickel prices also forecast to come down MEPS expects prices to be lower by the end of the year than it is forecasting for the end of the second quarter.