Flat market in carbon steel prices

Most first quarter business in the flat products sector has been completed, according to the latest forecast on EU average carbon steel prices, and no major changes are likely next month.

Most first quarter business in the flat products sector has been completed, according to the latest forecast from MEPS on EU average carbon steel prices.

And the market watcher envisages no major changes next month.

Any movement in the balance of trade is not likely to become apparent until the start of the second trimester, it says.

"We still believe that local consumption will continue at the level in the previous year," says the report.

There are prospects of a marginal improvement now that the stock overhang has been largely reduced.

However, an increase in the volume of third country imports entering the region in the second and third quarters of the year will, most likely, offset any price benefits which may have accrued in recent months.

Consequently, MEPS maintains its forecast that transaction values will drift lower into the autumn.

Towards the end of 2006, the global oversupply situation should ease as Chinese mills reduce their rates of growth in output to match more closely domestic demand.

Demand for most long products will remain sluggish due to the difficult winter weather conditions.

"We therefore still anticipate further transaction price slippage in euro terms over the next few months with a modest revival up to the end of the autumn period in both steel consumption and pricing," it says.

"The low priced long product categories are less affected by the threat of Asian imports".

"High freight costs mitigate against transporting low margin products for construction from the Asian continent".

"As winter approaches in 2006, we expect a fall in prices as demand slips away again".

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