Prices of European Steel Products Rises in September

A recent report from steel industry analysts MEPS International Limited (Sheffield, England) reveals a rise in the transaction prices of steel products across Europe in September. According to reports from Industrial Info Resources (Sugar Land, TX), the price rise has been mainly attributed to the shortfall in supply, as most of the steel production units in the region reduced capacities because of poor demand and the global economic slowdown. Steel production capacities were down more than 50 percent in mid-2009, while steel consumption during the last year declined about 35 percent.

Europe seems to have reacted quite late to declining steel demand, cutting down capacity only toward the final stages of the requirement cycle. The demand for steel products is seeing a revival in the short term because of lower inventory levels, and the products are consequently commanding higher prices as limited production capacities are not able to meet demand instantaneously. Increasing raw-materials costs are also contributing to the increased prices.

In the long run, steel prices in Europe are expected to decline, as idling steel producers are likely to cash in on export opportunities to reviving markets. Steel producers from Russia, catering mainly to the growing demand in China, will now be looking for potential markets in Europe, as the Chinese markets have already been flooded with steel products during the past year. The Chinese themselves are looking to export surplus steel to Europe.

Reactivating domestic capacities too quickly is likely to bring down prices. Many of the blast furnaces in Europe have already been brought back into production, with a minimum of six other units set to be reinstated by the end of this year. On the demand side, drivers such as the construction and the automobile sectors have been forecast to see minimal growth during the next year. However, the downward trend is likely to be offset by increased spending in the home-appliance sector. Government-stimulated projects and an improving credit scenario are anticipated to provide the necessary impetus for the steel sector during the next year.

Steel product prices across Europe as of May 2009 for Grades 304 and 316 respectively were $2,033.70 and $3,127.29 per ton of hot-rolled coil; $2,619.73 and $3,682.60 per ton of hot-rolled plate; $2,247.94 and $3,341.67 per ton of cold-rolled coil; and $2,789.64 and $4,327.60 per ton of drawn bar. Long product price in northern Europe ranged from $221.40 to $250.96 per ton this month.