EU AVERAGE CARBON STEEL PRICE FORECAST FOR FEBRUARY 2005

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EU AVERAGE CARBON STEEL PRICE FORECAST FOR FEBRUARY 2005
07 March 2005 - MEPS (International)

In the flat products category, the general weak market tendency for strip mill products continued into February, as customers held back on ordering due to high inventories.

Our forecasts last month were in line with market trends. However, our short term forecasts have been uprated. The mills now have more ammunition to press ahead with steel price increases for second quarter deliveries after the raw material cost escalations. The mills are unlikely to be able to recover the full amount of the settlements for ore and coke but a recovery in the selling values of steel is a real prospect in the short term.

However, we still believe that the current oversupply situation will lead to modest price deterioration in the final months of the review period. It is probable that the market may be stimulated in the next few months by customers trying to order ahead of further price rises.

Hot rolled plate demand remains strong in Europe. Consequently, we have uprated our forecast figures for the product but price erosion could set in towards Winter time.

In the long products segment, steel selling figures are now close to the bottom values we expect to be reported this year. Our published indices in February fell due to a decline in scrap costs. We expect scrap prices to increase in the future. These latest steel price reductions are likely to be recovered over the next two or three months as the scrap scene improves. We forecast transaction prices rising in the Spring and Summer, before falling towards the end of the year. The mid year gains are expected to be higher than predicted in our January prognosis due to the likely change in raw material costs.

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