European Union average hot dipped galvanised and electrozinc coated product prices stabilised during May, 2007, and are likely to stay stronger than electrozinc as the market for the latter is weaker

The MEPS 'EU Average Hot Dipped Galvanised and Electrozinc Coated' prices remained stable in May. This was in line with our expectations when we produced our forecast a month ago. Last year's escalating zinc costs pushed up coated sheet values but caused a divergence between hot dipped galvanised and electrozinc prices from historically similar amounts.

This resulted in an unsustainable price differential of almost EUR 120/tonne.

The current variance is now half of that figure as zinc costs declined during the first quarter of 2007.

Although LME prices recently picked up, a return to the highs of 2006 does not look likely.

Reports suggest supplies are now in surplus.

However, values are not expected to fall back to 2004/5 levels.

Hot dipped galvanised prices are likely to stay stronger than electrozinc as the market for the latter is weaker.

Much of the growth in demand for hot dipped in the EU is from the construction sector, which is predicted to stay firm in the medium term.

This should result in the gap between the two products continuing over the forecast period.

Prices are expected to show modest strengthening over the coming months as demand continues to improve.

Price weakening is expected to set in towards the end of the third quarter in both products due to seasonally lower demand and the threat from imports.

Values are then forecast to stabilise in early 2008.

Source - MEPS European Steel Review.



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