European Union survives hard times. According to experts economy growth in EU countries in the Q4 will close to null. Improvement in 2011 is not expected. The negative forecasts affect steel market. In particular, European metallurgical companies which started to increase the prices in mid-November had to reduce the prices in recent days.
The demand for flat steel in EU is not as low as it can seem. At least the situation is improving as compared with the Q3 when obvious consumption decreased by 17% as compared with Arcelor Mittal
Euro to US dollar rate decrease helps European metallurgists. During Nov. Euro rate decreased from more than $1.40 to less than $1.33. It substantially increased the competitive ability of the local companies. Thus last week HRC price in the south of Europe amounted 460-490 euro ($610-650) per ton EXW; in Germany and in Eastern Europe it was 480-510 euro ($636-676) per ton EXW. Ukrainian suppliers only could compete with these prices. They offered HR steel to Italy and eastern Europe countries at $600-640 per ton CFR/DAF. The prices offered by Turkish companies were not lower than $650 per ton CFR. Chinese and Northern America companies offered $660-690 per ton CFR.
However, the main problem of European metallurgists is excessive supply. Most companies offered their December products. However, they still have steel produced in previous months. It is often distributed at dumping prices. The biggest misbalance presents in galvanized steel market. Galvanized steel prices are recently lower than CR steel prices. Some manufacturers can sell at the price by 30-50 Euro per ton higher.
But recently European companies reduce the outputs volumes. In Nov. Arcelor Mittal stopped two blast furnaces at its mills in France and Poland. The manufacturers hope that in the Q2 of 2011 the market will be more or less stable. Some of them have already announced the prices increase in Jan. by 20-30 euro. Some traders suppose that mills will sell their stockpiles at least till March. As per their opinion the prices can increase in the beginning of the year, but not to high extent.