North American carbon steel prices may fall

North American average carbon steel prices - extended delivery lead times and full order books has prompted an upgrade for MEPS forecast for the North American average flat products price.
Import quotations have been rising in line with the upward trend in local values. Consequently, the import threat is not increasing.

We believe that customer inventories are starting to grow.

At this time they are not excessive and, therefore, do not present difficulties for future mill order books in the near term.

It is, however, probable that foreign supplies will increase in the coming months.

This, combined with higher customer inventories, could exert downward pressure on prices as we approach the New Year.

We believe that the inherent strength of demand should mitigate against a price collapse in 2007.

We predict a steel price erosion to the end of the research period.

In the long products category, strong market demand is forecast to extend for most of the remainder of 2006.

Further price increases are expected into the Winter months.

We detect only minimum negative price pressure from imports.

Nevertheless, the impact of poor weather conditions around the turn of the year is likely to stifle consumption.

As a consequence, we predict a steady decline in the North American average long product price during the early part of 2007.