Steel Sheet Shortage Odds Raised to 50%

Given the increase in steel sheet prices in most markets, including the high-priced USA market, and rising apparent steel demand growth in most regions of the world, we have raised the odds of a steel sheet shortage later this year to 50% from 45% previously. In fact, if we hadn’t learned of a $10 per tonne decline in the price of thicker-gauge hot-rolled band in China the past few days – after a rise of about $70 per tonne in the prior six weeks – we were thinking of boosting the odds of a shortage to 55%. (Note: Regarding the recent decline in the price of thicker-gauge HRB in China, we do not know at this time if this is an indication of a trend, or just a blip in the recovery. Either way, it is WSD’s opinion that the Chinese market will be oversupplied for steel sheet in the second half of 2006.)

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