EU carbon steel prices to rise further

The tight supply situation and input cost recovery indicate that the peak EU carbon steel values achieved in early 2005 will be surpassed towards the end of 2006.
The leap in transaction prices in June has prompted MEPS (International) to make an upward revision to our average flat products' price forecast. Availability remains tight for both strip mill and plate products. The higher settlement for iron ore has encouraged the mills to push for increased transaction values.

Moreover, the producers are also keen to recover the cost of zinc on coated products.

The tight supply situation and input cost recovery leads us to believe that the peak values achieved in early 2005 will be surpassed towards the end of 2006.

We still believe that a rapid decline in transaction values will occur in 2007.

Higher prices in the second half of this year are likely to attract imports from many parts of the world.

There are signs that delivery lead times are starting to reduce.

Moreover, customer inventories are likely to have built up to excessive levels by the end of the year.

In the long products sector, demand in most member states is quite firm.

Our twelve month forecast for the average EU long product price remains similar to last month.

Further increases are anticipated over the period to October.

These will be supported by higher basis values and dimensional extras.

Scrap prices, we believe have reached close to their peak values in this cycle.

As we approach the Winter period the average long products price is likely to decrease as construction sites start to slow down.

Import volumes are also likely to pick up at that time.

An upturn is predicted once again in the Spring of 2007.