EU steel imports not yet damaging prices

Edited by the Engineeringtalk editorial team Aug 5, 2004

The latest increase in flat rolled steel prices in Western Europe has pushed third quarter values up to unprecedented heights, says MEPS (International).

The latest increase in flat rolled steel prices in Western Europe has pushed third quarter values up to unprecedented heights, says MEPS (International).

Under normal circumstances MEPS would expect to see this resulting in a substantial rise in the inflow of imports.

But figures for the first quarter of this year show there was, in fact, a sharp decline.

Excluding semi-finished products, imports were 4.1 million tonnes in January/March 2004, a drop of almost 10% from the same period last year.

The decrease was sharpest in flat rolled products where period one imports of 2.63 million tonnes were down by more than 13%.

The fall was probably due to the low level of prices in the EU relative to other markets - particularly North America, but also some Asian countries.

In addition, it may reflect the very high cost of sea freight in the first trimester.

Trade statistics take a regrettably long time to be produced.

So any assessment of recent import trends has to be based largely on anecdotal evidence.

As EU prices rose sharply to move more closely into line with those seen elsewhere, import volumes should have been increasing in April/June.

But there is little evidence of any significant upswing.

This is largely because of booming demand in other parts of the world.

After a slowdown in China as the government tightened credit terms, a falling-away of re-exports indicates the possible resumption of stronger demand for imports.

Some major Asian mills have been sufficiently encouraged to proceed with plans to increase their third quarter prices.

Export volumes from Russia and Ukraine are reported to have fallen because of higher domestic demand and for seasonal reasons.

Continued high pricing in the USA means more material will be attracted to that market.

As EU mills have sold almost all their third quarter capacity, buyers who have not covered all their requirements will find it is not easy to secure supplies.

In plate the situation appears to be even tighter than in strip products.

Many producers within the EU and in neighbouring countries seem to be booked out for most of this year.

Production cuts at some plate mills are exacerbating the tightness in supply.

Despite comments by one leading European steel executive about limited opportunities for further price increases, there now seems to be little chance of prices falling in period four.

Coke remains in short supply, leading to a reduction in the availability of slabs.

In addition, demand for this product has recently gone up in North America and Asia, reducing the quantities available to Europe from suppliers in Brazil and Russia.

Asian prices for slabs have increased by as much as US $60 per tonne since the second quarter.

The days of massive price increases for EU flat products may be over, but a further advance, albeit a more modest one, seems a realistic proposition for the year's final quarter.

The absence of serious import pressure should help the EU mills achieve a few more Euros.