Nordic Steel Market Price - Forecast Looks Grim

The MEPS February Nordic Average Hot Rolled Coil transaction price slipped by over €20 per tonne. Hot rolled plate values recorded a larger fall of approximately €60 per tonne. Inventory levels are higher than desired across the region, particularly at current low sales volumes. This is putting downward pressure on selling figures as distributors attempt to off-load excess material. Further price deterioration is forecast over the coming months as customers continue to de-stock.

A recovery in transaction values is predicted to occur later in the year. Large reductions in 2009 raw material contracts could restrict price increases before this point. Government stimulus packages may take several months before they create any real increase in steel demand. Consequently, demand on the mills is forecast to remain below recent averages. The effects of ongoing financial restrictions are also likely to limit the purchasing power of many companies. However, these should begin to ease by early 2010.