We maintain our predictions of steady price erosion in this region for the next nine months. The rate of decline is not likely to be as savage as in the period September 2004 to mid 2005. The price decrease will be most pronounced in the supply of commercial grades, which can readily be produced by Asian mills and require the minimum amount of certification and testing. Prices for the superior grades should hold up better than standard specifications.

If you’re not in the steel business, this rather terse paragraph needs some translation. These people do steel price forecasts for the steel industry, so their forecasts are worded so that higher steel prices are good. For metal consumers, this is a more mixed situation, but never mind. That’s how the forecasts are worded.

The “commercial grades” (which can be most readily produced by Asian mills) means plain steel, hot rolled or cold rolled. These will drop in price as the imported steel floats across the ocean and arrives in North America and competes with continental steel. But that takes a while, because they don’t fly them over in airplanes. And it’s conditional on there being an excess in the Asian market (but that is forecast to be true).

What the Asian mills have only limited ability to produce is spring steel, stainless steel, the various coated steels (galvanized, aluminized and their combinations) and anything needing extensive certification (like automotive steel). For a slide forming shop like us, this is our bread and butter. There’s very little plain cold rolled that we do. Most of our work is flat springs and formed springs (but not coil springs). These all need medium to high carbon steel, or stainless, or something. So, if this prediction is correct, there will be little to no price abatement in our input costs, and therefore, little price improvement to our customers.

Historical prices, Dec 03 to Nov 05, are available on their web site here

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