Temperature shows early signs of rising to the boiling point outside of China

Hot-rolled band (HRB) spot prices outside of China, which have already recovered substantially from the lows in the United States/Europe and on the world market, may rise a further 10%+ in the next three months.

For 2006, WSD places the odds on the non-Chinese steel outlook as follows:

• 25% likelihood of a steel shortage (up from 20% previously, due to the recent rise in spot HRB prices).

• 30% likelihood of a shake-out (up from 20% previously, due primarily to the possible adverse impact on steel demand of the surge in oil prices).

• 45% likelihood of moderate oversupply (reduced from 60% because the above odds increased).

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