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Steel values to fall in the short term

Steel values to fall in the short term
Financial difficulties are likely to force many customers to continue de-stocking over the next few months, limiting mill sales.

Financial difficulties are likely to force many customers to continue de-stocking over the next few months, limiting mill sales.

There is little sign of demand improving within the flat products sector, with steel values now expected to slip further in the short term. Financial difficulties are likely to force many customers to continue de-stocking over the next few months, limiting mill sales. This could put negative pressure on selling figures. However, prices are near to, and in some cases below, the cost of production. Consequently, there may be little room for further significant reductions in transaction values. The recent weakening in the US dollar should also limit the extent of the declines in world average prices. Hot rolled plate selling figures are likely to move down further than the other flat categories due to bloated inventories and weakening consumption from the energy and wind turbine markets.

Initiatives by some governments to encourage car buying will, almost certainly, begin to filter through to higher vehicle production and, therefore, increased sales of cold rolled and coated steel during the second half of 2009. This should lift steel transaction values after the summer as buying resumes and customers consider rebuilding inventories.

Production cuts throughout the year are likely to re-balance supply and demand by the fourth quarter. Consequently, price advances may begin to develop during the latter part of our forecast period.

Falling raw material costs are forecast to push long products selling figures lower in the near term. The current economic downturn is likely to further depress end user consumption. Ongoing inventory depletion is also expected to result in continued poor sales over the next few months. However, output restraints by mills in all regions will help to reduce supply to the market. Prices should then stabilise around the middle of 2009.

Demand is forecast to improve during the second half of 2009 as government stimulus packages filter through to increased sales. Consequently, a modest price revival is predicted after the summer period. However, construction activity is likely to remain subdued throughout 2009. Confidence is likely to grow in early 2010, with further price gains forecast for the first half of the year.

www.TurkishMaritime.com.tr

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