MEPS Predicts EU Steel Price Upturn in
The MEPS EU all products composite steel price, in
July, stood at €50 per tonne below its April peak but €44 per tonne
above the corresponding figure in July 2016. Contrasting fortunes
were witnessed for the two major product categories. Last month, the
MEPS EU flat product composite price increased by €77 per tonne,
year-on-year, whereas that for long products fell by €6 per tonne,
during the same period. A number of factors can be noted behind this
A key driver for the upturn in flat product selling figures was
increased costs for blast furnace steelmakers. Coking coal prices
surged in September-November 2016, following enforced output cuts at
Chinese mines and supply problems at a number of facilities
worldwide. Values spiked again, in April 2017, as a result of damage
to transportation routes in Australia in the aftermath of Cyclone
With the exception of a dip in the second quarter of this year, iron
ore prices have been strong, surpassing many observers’ previous
predictions. High Chinese crude steel demand supported mill input
prices, despite plentiful supply, following recent mine expansions.
In addition to the rises in steelmaking raw material costs, coated
coil transaction figures received a boost from strong zinc selling
Ferrous scrap costs, a significant influence on long product prices,
also increased, during the past twelve months. However, the gains
were not as noticeable as those for coking coal and, to a lesser
extent, iron ore, used in the manufacture of flat products.
The supply/demand balance was much tighter for flat products in
comparison with long products, during the past year. The automotive
sector was a standout performer across the major steel end-user
segments, boosting demand for cold rolled and galvanised coil.
Previous temporary closures and production problems at a number of
local mills resulted in extended delivery lead times and, therefore,
upward price pressure.
The construction industry, the main consumer of long products, has
recorded only gradual improvement. Supply of bars, rods and beams
was plentiful, with strong competition between domestic mills.
Furthermore, producers, particularly in southern Europe, were
adversely affected by a downturn in export demand from overseas
In the flat product segment, import prices have a significant
influence on EU domestic price trends. A number of trade defence
measures were implemented during past twelve months. However,
volumes from overseas fell by a modest amount, as local buyers
continued to secure offshore supplies due to the restricted domestic
availability. Nonetheless, with the exception of a downturn in the
second quarter, import prices climbed sharply.
Transaction values for both flat and long products are forecast to
rise when business resumes, following the summer holiday period.
Globally, steel selling figures increased markedly in recent months,
led by the uptrend in China. Furthermore, mill input expenditure is
A lack of competitively priced import offers should enable European
flat product steelmakers to secure rises, in the short term.
Moreover, bullish sentiment in China is driving up spot prices for
coking coal and iron ore. As a consequence, transaction values for
hot rolled plate are expected to follow the uptrend in coil,
supported by elevated slab costs.
Following the small upturn in early July, the rebound in European
long product prices should accelerate markedly, in September. Mills
are making concerted efforts to lift their selling figures, after
the substantial erosion in profit margins, during the past twelve
months. Sentiment has improved since the return of the key Algerian
export market. A sharp downturn is developing in the volume of
Chinese steel exports for rebar and billet, due to government
mandated capacity closures and better-than-expected domestic demand.
This has resulted in substantial rises in billet and scrap prices,
worldwide. Furthermore, along with elevated scrap costs, mill
expenditure for electrodes and ferro-alloys is rising.
MEPS predicts a seasonal softening in prices for both long and flats
products, in the fourth quarter of the year. However, a portion of
the gains secured in September should be retained.
Source: MEPS -
European Steel Review
- August 2017 Issue
All Products Composite Purchasing Price & Index
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