However, the UK-based steel analyst suggests that prices will begin drifting downwards by the end of the year and beyond. The prediction comes after MEPS suggested European steel prices across the board were beginning to show signs of decline in March.
According to MEPS' index of transaction prices in which January 1997=100, March figures have fallen from February levels by between two and four points for individual flat rolled products, and by as much as ten points for long products. This leaves the EU average flat products price at €591 per tonne, down from €602 last month.
The analyst says that customers are holding off from placing fresh orders, and less than the normal volume of agreements for new business have been reported this month. They are living off stocks that have been mounting since the latter part of 2004.
There is undoubtedly a stock overhang in Europe and North America. However, the strong markets in Asia has lead MEPS to predict that global prices will continue to be quite strong - at least in the near term. Projections indicate that world all products steel prices will end the year below the values at the beginning but will remain solid.
The tendency for long products should equal that for flat, partly because of raw material considerations. Rises in the cost of iron ore, coking coal and energy are making HBI/DRI and pig iron more expensive.
In flat products, with the possible exception of plate, steel prices look to have more downside over the next few months. Markets in Europe and North America appear closer to their peaks. Indeed MEPS reported in February that increases in European steel values had made the EU the most expensive market in the world.
The EU average price for cold rolled coil was $US838 per tonne in January, considerably higher than in the other main consuming countries. Prices for hot rolled plate, galvanized sheet and some other products were showing a similar divergence.
It was predicted that the knock-on effect for steel packagers, already battling tight profit margins and threats from innovative new packaging materials, could be severe. Arcelor, the Luxembourg-based steel giant had already raised prices in the first quarter 2005.