European Steel Prices Market Summary Feb.

26. Feb. 2010

European metallurgical companies started this year very positively having gained flat and long products prices increase by 30-50 euro per ton in the first half of Jan. However, there was not new increase scheduled to Feb. The quotations for more deficit CRC and galvanized steel eventually stabilized, and HRC, plate, and construction steel prices somewhat decreased.

In the middle of Feb. the average level of European HR steel prices amounted about 410-430 euro per ton EXW; rebar fell to about 380 euro per ton EXW. Recently some companies announced the necessity of new increase of the prices in the beginning of the Q2 explaining it by raw materials prices growth and saying about the possibility of 50 euro per ton increase. However, independent analysts doubt that these plans will be fully implemented.

According to British consulting company MEPS, the main problem of entire Western Europe is low activity of the end-users. Under the conditions of economic instability most industrial companies do not want to risk investing much money to the stockpiling. According to the CEO of Corus, Kirby Adams, today only 15% of the company’s sales volume fall on the long-term contracts (about a year); the majority of the buyers prefer to conclude the agreements for a quarter or even a month. As Mr Adams says, European steel market will recover to the 2007 level not earlier than in 4-5 years.

In recent months the best results in the EU countries were shown by the automotive industry but the rally here was caused mostly by the stimulating programs which have been already terminated. Further perspectives are rather indefinite, that is why the distributors also prefer to hold careful policy. Although the stockpiles are low, the dealers do not try to refill them. But, according to CRU, some consumers, bewaring of the prices increase in the Q2, have begun to conclude new contracts, while the prices have not grown yet.

In European long products market negative weather conditions played the negative role and decreased the demand which was low even before. Central European market, especially Poland where the preparation for the Euro-2012 continues, is more or less stable. At the same time in the Mediterranean countries the situation is depressive. Besides, the before-crisis mechanism of construction industry financing has not recovered in the whole region.

Cheap euro helps European metallurgists. The euro/US dollar rate continues to decrease, having fell almost to $ 1.35 in the end of last week. As the result dollar prices of European companies occurred to be much lower than average world level, especially if to take into account recent increase in Middle East. Thus, European rebar, which is offered to North Africa at 360-370 euro ($487-500) per ton FOB, became cheaper than Turkish. European HR steel is quoted now at $554-581 per ton EXW. Today it can compete with Ukrainian steel only, which is offered at about $570 per ton FOB Izmail. But some European analysts still talk about the flow of cheap Chinese products after the end of the Asian New Year holidays.

The end of European problems is not seen yet, that is why in the nearest future this market is likely to be very attractive for Russian and Ukrainian HR steel suppliers. But in the beginning of the Q2 European metallurgists will obviously have to gain the prices increase, but the results will probably to be worse than in other regions.
[Rusmet.ru]