UK based MEPS said that "Our forecasts are little changed from last month. Transaction values for all products are expected to continue on their downward path in the short term. Distributors are unlikely to rebuild their inventories during the remainder of 2009 due to poor sales and year end financial constraints. A reduction in both alloy surcharges and basis numbers is anticipated over this period. The rising threat from imports will, almost certainly, force local mills to cut prices as they fight to retain market share. EU steelmakers may also decrease production in a bid to rebalance supply and demand."
It said that “The monthly average cash nickel value is set to rise by approximately USD 1000 per tonne in October. This, despite inventories in LME warehouses reaching a new high of over 124000 tonnes. However, prices do not appear to be following market fundamentals. A weakening US dollar put upward pressure on nickel figures over the last four weeks. Mines continue to come back on stream with new projects also expected to start up shortly. This should add to oversupply and keep price rises in check. Moreover, many stainless steel mills, particularly in the EU and the US, are likely to utilize more scrap to obtain their nickel units. Therefore, selling figures are forecast to decrease in the short term. Stronger demand is envisaged next year. Price rises are then predicted for the first half of 2010.”
MEPS added that "Consumer confidence is expected to return early next year as the EU emerges from the recession. Credit restrictions could ease as banks become less risk averse. Consequently, customer purchase volumes should grow during 2010. This is forecast to push stainless steel transaction values higher for second and third quarter deliveries. Rising ferrochrome and molybdenum costs are also likely to add to the upward price pressure over the next twelve months. However, a slow economic recovery may limit these advances."
