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STEEL PRICES UP BY 150 PERCENT IN PAST THREE YEARS
We are completing the most tumultuous year that the world’s steel markets have ever seen. Production of crude steel will exceed 1 billion tonnes for the first time. Steel consumption is at record levels. It is scarcely surprising that steel prices have been at historic highs. This is reflected in a new price series that MEPS will soon be launching. As from 2005 MEPS will be adding a new range of data – average prices by region, for both flat and long products. In addition, MEPS will be publishing a world average price, incorporating all products. In flat products, the new average price is a composite of the four major product categories – hot rolled coil, hot rolled plate, cold rolled coil and zinc coated coil. Tinplate and electrical sheet are excluded from the calculation. The composite price is built up from a weighted average of consumption of each product in each of the countries for which we collect data – spread across the major consuming regions of Asia, Europe and North America. The MEPS world average flat rolled steel price covers about 65 percent of global consumption. MEPS’ world average price for flat rolled products for this month stands at $US724 per tonne, an all-time high. A year ago, the figure was $US449 per tonne, so the increase over the last twelve months has been 76 percent. Looking back over two years, the number has increased by 94 percent since December 2002. On an index basis, taking prices in January 1997 as being equal to 100, we find that the world average flat product price fell to a historic low point of 63.2 in January 2002. Since then, however, there has been an almost continuous climb, until the index for this month stands at 163.4 - up 150 percent in three years. MEPS prices are collected in the national currency of each country, and converted into US dollars at the rate then prevailing. So the decline in the value of the dollar over the last couple of years has had the effect of inflating steel product values in countries such as those of the Euro-zone, and Asia – though not China whose currency is pegged to the dollar. In the last quarter of 2004, the market has changed considerably. While average prices in Europe and Asia have continued to advance, North American buyers have witnessed a decline in flat product values. The average price has dropped back from $US860 per tonne to $US780 per tonne. Europe, at $US794 per tonne, is currently the highest priced market – though currency movements could alter that position at any time. Source: MEPS - International Steel Review
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