Global steel prices likely to remain firm into New Year

But, the latest report from steel industry experts MEPS (International) warns that the peak of the recent surge in prices “cannot be too far away”.

While prices have been erratic during the first part of 2003 with the US introducing steel import tariffs to protect its steel firms, but analysts have said growth in the last few months of 2003 has seen prices up 10% on this time last year and up by 50% since the start of 2002.

The average world price for hot rolled coil ended the year at $US362 per tonne, with other steel products showing a similar development. And, the price of scrap has risen by well over 50% since the start of 2003.

Steel price rises over the year have been “somewhat surprising” given that construction in most major markets – North America, Western Europe and Japan – has not been particularly healthy, although there has been strong demand for light long products in China and the Middle East.

The main contribution to the rising steel prices has come from rising costs, including higher expenditure on iron ore, coal/coke, ocean freight and other inputs. The mills are trying to recover their outlay rather than raise profit margins. The weakness of the dollar on the currency markets has also played a part in the prices rises, particularly in the last few months.

Going into the New Year, the MEPS report said the tone in world markets is of continuing firm prices for many products. High Chinese demand continues to grow adding to the sense that the strong steel prices will remain. However, the experts said the high prices would soon reach a peak and could then see a decline.