Metal prices to fall in 2007

Some downward metal price predictions for 2007 have just been published by Purchasing.com.

These forecasts suggest falling steel prices this year, with a 2007 steel price low in the fourth quarter of 2007.

Aluminum, copper, nickel and tin prices are also forecast to drop in 2007. See http://www.purchasing.com/article/CA6406364.html?industryid=21950.

blogger@steelonthenet.com

Steel prices - were we wrong?

Reports from China indicate that 2007 has started off with large price increases for hot rolled steel coil. Mineweb today reports that monthly spot prices for hot rolled coil have increased approx 7.3 percent. Continued strength of exports and low steel inventories, coupled with recovery in domestic steel consumption after a period of demand weakness late last year, account for this.

Our own economists predicted falling world steel prices during the initial months of 2007. Could we be wrong?

blogger@steelonthenet.com

2007 steel price forecasts

Forecasts for year 2007 steel prices are proving a little more divergent than usual...

The http://www.steelonthenet.com forecast [see steel price forecast 2007 - 2008], published at the end of 2006, predicts the next price low at end 2007 and the next steel price peak around Q3 2008.

This set of predictions is in line with the general downward forecasts for several other metals. Analysts from the Wachovia Foundation discuss these in the context of the general slowdown worldwide. Wachovia's analysts currently also see much downside in steel prices.

Yet recent reports from other sources suggest steel price stability in 2007. In discussions about POSCO's earnings prospects, CNBC for example discuss a stable steel price outlook for 2007.

More bullish views exist also. The India Times in particular discusses steel ingot prices [which seem to be rising despite general observations elsewhere of falling steel prices between Q4 2006 and Q1 2007]. These steel prices have increased since the beginning of 2007. Ingot steel price futures also show a rising price trend as we move into mid-2007.

So what is going on? Perhaps we will reappraise matters at the end of 2007, but for the time being we stick with our own projections for falling steel prices over the coming months.

blogger@steelonthenet.com

Energy efficiency - steelmaking in Ukraine

As Russia has imposed massive increases in natural gas export prices in recent years, so the price paid by steelmakers in the Ukraine has jumped from $50 per 1,000 cubic metre in 2005 to $130 today.

Yet the price increase - which would normally be sufficient to cripple profitability in most steelmaking firms - has strangely enough driven a process of restructuring which according to industry commentators has actually left the Ukrainian steel industry in better shape.

The increases in energy costs have according to a report in the Miami Herald, driven modernisation and investment, forced a general move away from gas to coal [which is abundant in Ukraine] and two years on left a steel industry that is far more self-sufficient and independent of energy prices otherwise controlled by Moscow.

For original report, see http://www.thatsracin.com/mld/miamiherald/business/16387034.htm?source=rss&channel=miamiherald_business

blogger@steelonthenet.com