UK steel suppliers could start to raise their prices during 2016 as the market for the material readjusts to a period of high supply.

On a global basis, supplies of steel have been high in recent years, leading to lower market prices – but the latest forecasts from MEPS suggest that this could be about to change.

In terms of steel prices, MEPS says 2015 is on course to post the fifth consecutive annual decrease in market values of the material, but this trend is nearing its end.

By 2016, the raw material supply market should have begun to adjust to the present-day market, with mergers and acquisitions, along with ‘rationalisation’ among those firms whose operating costs outweigh their sales.

“The combination of a slight improvement in the global economy, a leaner raw materials supply industry and rationalisation in the steel sector, should lead to a modest upturn in steel selling values in 2017 and beyond,” MEPS predicts.

But this is not the only factor that could lead UK steel suppliers to raise their prices in the coming years, as the output from global steel producers is also falling at present.

In 2015, MEPS predicts total global output of steel at 1.62 billion tonnes, a 3% drop, and the first decline in output since 2009 when the recession was in full swing.

During 2016, output is expected to recover to 1.64 billion tonnes worldwide, but this is only a 1.2% year-on-year rise.

The short-term trend brings supply closer in line with levels of demand – and it could see UK steel stockists’ prices rise as the availability of raw materials decreases.

Placing orders early is of course one way to avoid any future price rises, by purchasing materials at their current low prices, while second-hand steel will continue to offer good value for suitable applications, from UK steel stockists who collect the metal for reuse in this way.