Inventories at the service centres are coming down slowly. Further mill price increases are anticipated in the coming months as higher scrap costs are recovered. As a result, we have uprated our past forecast. Real demand is improving and the import threat diminishing, at least in the short term. Consequently, we forecast a substantial rise in the average price over the next 5/6 months. Prices should peak at a figure close to the high point of the previous cycle in mid 2006.
We expect the current scrap price to decline later in the year as the rate of increase in global consumption starts to slow down. A price slippage is predicted for the second half of 2007. Inventories in the United States remain stubbornly above the desired levels for existing real demand in the market place. However, we caution that in the current climate, market fundamentals can be upset by actions in other parts of the world – particularly affecting price offers by importers.