The Hindu Business Line : Asian steel prices seen rising in H2

There are apprehensions that global steel prices could be softening once again. Mr Michael Tappeiner, Steel Analyst at WestLB, says that the prices in the US are peaking right now; while in the Europe, they are expected to peak in the fourth quarter of this year.

In Asia, he says, the prices are soft because of seasonal downturns and summer holidays. But he expects the prices in the Asian markets to pick up again. We do expect them to slightly pick up again in the second half of this year when investment starts picking up again. Excerpts from CNBC-TV18's exclusive interview with Mr Michael Tappeiner:

What is the reality with steel prices globally over the last one-month or so; are prices flat, or too weak?

It depends on the regions. In our view, there are three different steel cycles, the European one, the Asian one and the US one. The US prices are probably peaking right now, in Europe we expect prices to peak in the fourth quarter of this year. While in the Asia prices have been soft because of the seasonal downturns, summer holidays and so on. But there is officially also a structural issue in China with oversupply developing there.

Just to put it into perspective in terms of prices though, how much of a slide have you seen in markets like Asia for example in the past month?

It is not that much. Maybe it is somewhere around 5 per cent or something like that. We do expect them to slightly pick up again in the second half of this year when basically investment is picking up again.

But as I said before, there is a structural problem with oversupply in China and the Government activities to curb production so far have not been very successful. So this is the risk that we see very clearly.

You said that the US prices were peaking just now, what kind of price range in dollars are you seeing in the US market?

Prices are peaking. I would say it is around $600 per tonne at the moment.

With not too much upside you think?

Not too much upside. For 2007 the GDP growth is slowing. Also we are seeing increased exports out of China.

Where do you expect prices to stabilise for those hot rolled coils?

As I said, in Europe we expect prices to peak in the fourth quarter. So they should go up another 5 per cent. Also in the US, we expect prices to peak now and stay flat and potentially decline slightly in the fourth quarter. In Asia we see a slight pick up now after the summer holidays season and then there is a risk of a structural decline again. The amount of the decline is not certain, as there is no real visibility because it also depends on the success of the Government activities to curb the investment in production and also discipline of the steel producers around the world.