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EU steel prices slip as import threat intensifies

A MEPS (International) product story
Edited by the Engineeringtalk editorial team Dec 15, 2006

Steel prices in the main West European markets have started to look a little weaker

But these declines are reversing only to a minor extent what has been a generally strong upward move over the course of 2006.

After the reductions seen in 2005, all steel prices have showed a recovery this year.

In many cases close to, or above, the peaks reached in the latter part of 2004.

Looking at the EU's largest steel market, Germany, since January transaction prices for hot rolled coil have increased by 80 Euros per tonne or almost 20 percent.

Cold rolled coil has taken a similar development.

Most of the recent slackening in prices has been seen in southern Europe - especially Italy.

Here, December transaction values for hot rolled coil have retreated by about 60 Euros per tonne from their third quarter peak, but still remain some 85 Euros per tonne higher than they were at the start of the year.

France, the UK and Belgium have exhibited smaller declines.

In all these countries hot and cold rolled coil prices are substantially higher than they were a year ago.

In some steel products the demand supply equation is in better balance, and for these types of steel 2006 is ending with no report of price weakness.

The hot rolled plate sector has been strong all year, and only a few scarce minor price falls are now being seen.

December plate figures in most major West European markets remain more than 100 Euros per tonne higher than they were in January - an increase over the year of as much as 30 percent in some cases.

Demand for hot dip galvanised sheets has also been good.

Prices for this product have shown considerable resilience to downward pressures, though - particularly in Southern Europe - low priced imports have impacted the general market.

Even with the most recent dips, galvanised prices are ending 2006 with gains of 100 Euros per tonne or more over twelve months.

Going into 2007, any weakening of basis values is likely to be outweighed by increased zinc coating and dimensional extras.

Long product prices are usually more affected by seasonal factors.

Reinforcing bar and merchant bar values are certainly demonstrating this trend in the final quarter.

But, even after these dips, bar prices are still showing gains year on year.

Heavy sections and beams have been among the strongest of all European steel products this year.

Demand has been high at a time when supply has been restricted by mill operating problems.

In many countries, sections prices have advanced almost on a monthly basis.

The total rise in Germany since January has amounted to about 165 Euros per tonne - a 50 percent increase.

Elsewhere, increases of 150 Euros per tonne have not been uncommon, and the UK has shown a year on year hike of almost 200 Euros per tonne.

The producers will be looking to restrict the current downswing in prices as much as possible.

Some have already indicated they will take timely action to curb capacity if over supply threatens to develop.

It remains to be seen how effective their initiatives will be, at a time when the strong Euro continues to suck in record volumes of steel imports.

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