GLOBAL steel prices appear to be firming again after their steep decline in the first half of this year from last year’s record highs.

This should have a positive effect on steel makers Highveld Steel & Vanadium and Mittal Steel SA’s earnings, but should come as a disappointment to steel users.

Highveld said in a trading update last week that export sales in the third quarter of the year averaged $537 a ton compared with $510 a ton in the first half .

Mittal Steel SA also said in its third-quarter update earlier this month that export orders for fourth-quarter dispatches indicated a moderate improvement in export prices compared with the third quarter. Mittal’s global parent group and most other large steel companies cut production in Europe and the US significantly recently as part of efforts to halt the downward trend.

UK steel market analysts Meps’ global average steel price index shows a marked recovery in the third quarter, flattening out towards the end of the quarter.

The analysts expect prices of flat steel in Europe to edge slowly upward during the first quarter of 2006, and says more gains should be available in the second quarter on the back of the anticipated improvement in industrial and construction activity in that region.

Steel market analysts GFMS Metals Consulting agree, saying economic data continues to bode well for European demand next year, suggesting the current price situation will improve.

Meps expects North American prices, however, to decline slowly over the next few months with low cost imports from Asia expected to enter that market.

GFMS says US prices are the highest in the world at the moment, at about $570 a ton for hot-rolled coil and $680 a ton for cold-rolled material. Meps expects average flat product prices in Asia to decline next month, but to stabilise into January.

In SA, Mittal Steel expects demand in the fourth quarter to show an improvement over third-quarter levels, driven to a large extent by stock-building activities by customers following low inventory levels towards the end of quarter three.

Positive prospects for steel makers are tainted, however, by rising production levels in Asia, which could thwart an upward trend in steel prices.

Highveld, which said on Friday that it would delist from the Frankfurt Stock Exchange, says that world crude steel production continues the upward trend of the past few years with year-on-year growth to September at 6,3%.

China continues to dominate global growth, with an escalation in output of 27,4% over this period. Highveld says Indian crude steel production is now also showing an accelerated growth trend, with output up 14,6% in the three months to September.

Meps says Chinese steel production is expected to be 347-million tons this year, equating to 31% of global output. By 2008 China’s share of steel production and consumption are likely to have reached 32,7% and 32% respectively, says Meps.

“With such dominance, the Chinese steel enterprises must exercise a degree of responsibility,” warns Meps in a recent steel market report. “If supply continues to exceed internal demand, then global prices will inevitably decline to unprofitable levels.”

Meanwhile, South African steel users can look towards government’s new import parity pricing policy for some steel price relief. The policy has been approved by cabinet, but details have not yet been revealed.