According to MEPS, transaction values for type 304 are forecast to be relatively stable in June. The Alloy surcharge is predicted to fall marginally, with basis figures expected to be unchanged. End users will, almost certainly, reduce their purchases next month in anticipation of lower surcharges from July onwards. Furthermore, distributors are likely to begin de-stocking shortly as they fear being left with excessive material in a declining market. This is likely to prevent any attempts by the mills to push up basis values in the near future. MEPS added that “Considerable falls in the alloy surcharges, as a result of the nickel descent, are expected for July. However, rises in ferrochrome, scrap and energy costs should offset these decreases slightly. Further drops in nickel prices are likely over the next few months as the traditional mid-year lull in the stainless market impacts on nickel consumption.” MEPS said that “High demand for raw materials from China will, almost certainly, continue to grow. Stainless production for the first quarter in the country climbed by approximately 20% over 2007 figures. This should limit some of the falls in nickel values. However, additional pressure on supply of ferrochrome could lead to these costs moving even higher in the short term. A modest recovery in nickel cash prices is predicted for the first few months of 2009.” MEPS added that “Transaction values are predicted to decline throughout the second half of this year. Nickel price falls, coupled with weakening demand, is likely to put downward pressure on selling figures. Consequently, cold rolled coil type 304 numbers are likely to move under USD 4200pt by the end of 2008. At that point, grade 316 values are expected to drop to almost USD 6500pt. Uncertainty regarding the financial climate in the US will probably extend into the beginning of next year, with stainless prices drifting lower into early 2009. A modest recovery in prices is then forecast for the second quarter.”
