August 22, 2008

MEPS forecasts hot band price increase in EU in H1

UK based MEPS reported that the EU Average Hot Rolled Coil transaction value moved down in January as slow buying activity continues to depress local figures. But it added that as imports are expected to reduce over the coming months, coupled with rising input costs, it is likely to cause transaction prices to increase once again.

MEPS said that European mills will attempt to recover the higher cost of raw materials by pushing through significant selling price advances during the second quarter. It said “Rises of over 10% are predicted by the summer, as new iron ore and coal contracts force producers to gradually increase transaction figures further.”

It added that “Recent changes to export taxes in China should drive EU import prices upwards. This is expected to support the upsurge in transaction values as the import threat reduces.”

MEPS concluded that “Consequently, hot rolled coil prices are forecast to move above previous record highs, topping EUR 530 per tonne in the third trimester.”

However MEPS cautioned that values are expected to soften in the second half of this year as the weaker economic climate dampens buying activity.