London, 17 January 2012

MEPS forecasts that its benchmark, type 304, cold rolled Stainless Steel World Price will increase by $US850 per tonne over the next six months. The gain is expected to be driven by a combination of rising input costs and inventory building in the supply chains around the world.

Customer stock levels are low in all regions as buyers have been reluctant to purchase stainless steel products in the current economic climate. This pushed the world average figure for cold rolled type 304 to a 21 month low in December 2011.

However, over the past few weeks, nickel prices have escalated by 10 percent. Chromium prices are expected to follow a similar pattern. Scrap costs are increasing. These factors are predicted to lead to stock replenishment by both distributors and end users as they attempt to buy ahead of higher stainless steel prices resulting from rising mill input costs.

MEPS predicts a 25 percent rise in the benchmark stainless steel product price over the next six months in all regions of the world. Higher order volumes on the steelmakers and improving market conditions for the raw material suppliers is likely to boost stainless steel selling figures in the coming months.

MEPS contends that the price increases may be short lived due to the fragile nature of most markets. Stronger mill order books could easily result in oversupply of both input materials and the finished products. However, the anticipated reduction in stainless steel selling values during the second half of 2012 is not likely to be as steep as witnessed last year.

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