MEPS Forecasts Further Shift in North American Stainless Prices
08/04/2009 - MEPS International is forecasting that alloy surcharges for austenitic grades will move higher again in August 2009, with distributors expected to push through basis advances in September.
MEPS International is forecasting that alloy surcharges for austenitic grades will move higher again in August 2009, with distributors expected to push through basis advances in September. The agency said that distributors would likely return to the market as they refill depleted inventories. However, sales to end-users are forecast to stay low throughout the remainder of 2009.
The agency is also predicting some price slippage during the fourth quarter of 2009, noting that re-stocking by service centers could be minimized in the run up to the financial year end. A possible drop in LME nickel values could also put downward pressure on stainless steel transaction values over this period, although rising molybdenum and Chrome costs could offset some of these reductions.
The monthly average cash nickel value is expected to climb by almost $US1000 per tonne in July, due primarily to speculative buying by investors and reports of a recovery in stainless steel output. However, LME inventories remain above 100000 tonnes, despite a modest decrease during the second half of July. MEPS is anticipating that the nickel price is due to decline—possibly over the summer period—following its dramatic increase above figures suggested by market fundamentals.
MEPS said miner’s strikes should have little impact on supply as operations in other plants come back on stream. As a result, it is possible that large stock levels held in LME warehouses may not reduce significantly this year, which would put additional negative pressure on nickel values. Cash figures are then forecast to rise early in 2010 as stainless steel production returns to near-normal volumes.
Rising raw material costs, coupled with improving end-user consumption, should help to lift stainless steel selling figures during the first half of next year, said MEPS. Federal stimulus plans are also expected to filter through to higher sales. Despite these factors, MEPS anticipates that prices will not yet move back to the 2008 levels, and that market demand is likely to be slow to recover. This could offset the positive impact from the $US787 billion US stimulus package.
Source: MEPS Steel Prices Online
