/Rusmet.ru, Victor Tarnavskiy/ In early June several large European companies announced new increase of flat steel prices. Corus, which belonged to Tata Steel was the most active. It increased plate price in British market by 60 pounds per ton at once, to more than 600 pounds ($870) за т EXW. It was the third increase by Corus from the beginning of the year. The prices grew by 200 pounds per ton (50%) as compares with January. Plate prices increased in continental Europe as well. The majority of European manufacturers offer plates at 660-700 euro за т EXW.
Arcelor Mittal followed similar way. The corporation, which earlier announced the possibility of two blast furnaces stop at its European mills, increased its flat steel EXW prices for June at least by 40 euro per ton. In the second half of May Arcelor Mittal somewhat stabilized its prices due to the negative market situation. However, the prices have been returned to the former level or even higher. In particular, HRC reached 640-650 euro ($768-780) за т EXW.
Steel manufacturers mention several reasons for such the increase, which looks odd against the fall in global steel market. Fist of all, according to steel manufacturers, the demand for flat steel in the region rallied recently, especially for plates. The consumers prefer to buy more expensive domestic products due to minimal shipment terms. Besides, continuous decrease of euro/US dollar rate raises the competitive ability of European steel products as compared with import. Finally, in the Q3 raw materials prices increase is expected (iron ore and coking coal). Thus, steel manufacturers increase rolled steel prices in accordance with the costs growth.
At the same time many European independent experts believe that as early as in late June flat steel prices in the region will start down. As per their estimations positive changes are temporary.
Thus, the demand increase can be explained by the intention of both manufacturers and traders to make the stockpiles before the beginning of summer vacations season. Real consumption is almost at the same level as last year. Taking into account that steel output in EU in the first four months of 2010 was up 44% on the same period of last year, market is under the threat of overproduction. In long products sector excessive supply caused the prices fall as early as in May. In June or early July flat products prices can drop.
Actually, the automotive sector was the only industry in Europe where increase was mentioned in recent months. However, according to the European automobiles manufacturers association (ACEA), in April the registration of new cars in Europe decreased by 7.4 % as compared with same period of year ago. It was the first negative characteristic in recent nine months.
Up to recent time European traders preferred mot to import steel products, mostly due to long shipment terms and unpredictable market. However, the latest offers which are lower than European prices by 80-110 euro, are likely to change this trend.
The lowest prices, as usual, are offered by Ukrainian manufacturers, which offer HR steel at 490-520 euro ($588-625) за т CFR/DAF and plate at 560-590 euro ($672-708) за т CFR/DAF. Indian, Chinese, and Russian HRC are offered at 520-570 euro ($625-684) за т CFR and CRC are offered at the prices up from 600 euro ($720) за т CFR