Transaction values went up significantly in Asia and North America to reflect higher nickel costs. In the EU these were offset by declining basis values. We see scope for further substantial increases in the short term in Asia and North America with more modest figures expected in the EU. Basis values are forecast to decline in both the EU and North America over the next few months. However, lower alloy surcharges should help to alleviate the downward pressure in the medium term.

Higher stocks and lower demand will put pressure on the mills to discount prices in all regions during the second half. This will lead to an inventory depletion phase which will further exacerbate price erosion. In the longer term, we expect stainless transaction values to decline in all regions to the end of 2007.