/Rusmet.ru, Victor tarnavskiy/ Global steel market is decreasing and the prices in most regional markets are going down. At that Europe remains one of the regions, where the prices for flat steel are keeping high. Metallurgical companies from Germany, Benelux, and France offer HRC at 630-650 euro per ton EXW; in the south of Europe the prices decreased to 600-610 euro ($732-744) per ton EXW, but these prices are much higher than in Middle East or in Eastern Asia. Besides, Arcelor Mittal said that in the Q3 basic prices for HR steel at its mils will amount 650 euro per ton EXW; CR steel prices will amount 730 euro per ton.
According to the representatives of Arcelor Mittal, the company increases steel prices due to raw materials increase, first of all, iron ore. Iron ore exporters quote the prices in US dollars and steel manufacturers have to pay for it in decreasing euro. However, the problem is that European market is not ready today for rolled steel prices increase due to very low demand.
The decree of the Ministries of Finance of the EU countries, accepted on May 10, about the introduction of stabilizing fund of $960 bn in order to prevent the default in Greece, to support euro rate, and to avoid new loan crisis has not satisfied the market. Euro to US dollar rate keeps decreasing, shares in European exchanges are decreasing, and the investors sell the bonds in euro.
In this situation the majority of consumers buy steel products only to cover their needs and the distributors try to keep minimal level of the stockpiles. The fact that steel manufacturers are ready to fulfill the orders in short terms (less than 2 weeks) and to supply small amounts of the products (several tons) contributes to this. Long delivery terms cause the absence of the interest of European traders to the offers beyond EU, although imported products are much cheaper than domestic.
In the second half of May European distributors offered HRC at 550-570 euro ($671-695) per ton from the stock, i.e. the market prices were lower than EXW prices. At the same time Ukrainian exporters were ready to sell HR steel at $630-660 per ton CFR/DAF. However, there are no deals even at these conditions.
By all appearances, European metallurgists will have to release the prices or to cut the output volumes. But the prices decrease is unlikely to increase the demand significantly. Thus, rebar prices in Southern Europe have already fell to 470-480 euro per ton EXW; export prices fell to 450-460 euro ($549-561) per ton FOB. But the sales remain minimal. According to Eurostat in March 2010 the output volumes of EU construction sector reduced by 2.4% as compared with similar figures of last year. So, the crisis in this sector goes on. Moreover, the analysts forecast further decrease of the turnovers due to State investments decrease (as a part of the budgets balancing program).
European steel manufacturers still manage to keep their prices from the fall. They hope that in the nearest future the prices start growing again and the buyers will have to accept the suppliers’ offers. However, excessive stockpiles at the mills will spoil this strategy. If a supplier makes concessions, the prices would fall.