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Meps forecasts steel price upturn in 2014

- By Charlotte Stubben

Over the past twelve months, international steel prices have predominantly been on a downward trend.

Photo: Colourbox
The MEPS Global All Products Composite figure declined, in the second half of 2012, to an annual low of $US711 per tonne in November before rising just $US25 per tonne over the next three months. From the peak in February this year, transaction values fell almost $US60 per tonne to reach a forty-one month low in July.

Price hikes
Steelmakers in some countries have recently managed to stem the tide of price declines. Selling figures in the North American strip mill market, which have been under negative pressure all year, have moved up due to a combination of tight availability and low inventories. Chinese prices have escalated, driven by high iron ore costs and an improvement in sentiment.

A number of European steelmakers have announced hikes to their list prices. Consequently, MEPS believes that modest advances in market values will be recorded in the near term. However, the upturn in global selling figures is likely to be short-lived. Demand in Western nations traditionally softens in the fourth quarter. Consequently, prices are predicted to turn down, albeit only modestly, before the end of 2013.

Output cuts during winter
A more pronounced recovery in transaction values is foreseen as customers start to place orders for delivery at the beginning of 2014. Steelmakers are expected to make output cuts, during the winter. This should lead to more equilibrium between supply and demand in the new year.

Read more: Meps: Low demand keeps global steel prices I check

Price growth is expected to continue during the first quarter, supported by anticipated rises in raw material expenditure which usually take place in this period. The upward movement is forecast to reverse shortly after as buyers are likely to have finalised the bulk of their inventory building and production levels could start to outstrip market requirements. Steel selling figures are predicted to decline as the summer holiday season approaches.

The annual average Global All Products Composite steel price is predicted to increase approximately 4 percent in 2014, compared with the equivalent figure in 2013. This rise would bring to an end two years of consecutive declines.

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