HIGHER MILL INPUT COSTS DRIVE STEEL PRICES UP IN NORTHERN EUROPE - MEPS

Flat products in northern Europe recorded moderate price increases during the past month. The producers are seeking significant hikes, justified, they say, by their escalating input costs. Scrap has become scarce due to its relatively low value since the start of the recession. The upcoming iron ore contract negotiations are predicted to result in much higher values. However, price advances will be unsustainable without improved end-user demand and there are few signs of that at present. Weak consumption constrained the development of hot rolled plate selling figures, while shortages of some hot dipped galvanised items led to more positive adjustments for that product.

There has been little third party import activity. Demand has been solid in the domestic markets of China, India and Russia. Furthermore, price levels in Europe have not been attractive to producers from these countries.

Selling values for long products are more closely linked to the scrap market and, accordingly, rose more uniformly this month. Wire rod performed most strongly, on the back of perceived improvements in demand. Some suppliers have been unwilling to commit to long contracts as they predict further price advances. Purchases of merchant bars for manufacturing have not picked up to the same extent. Consumption of beams and rebar remains depressed as the ongoing harsh weather conditions hamper construction activity.

In February, alloy surcharges for 304 grade flat products from major European stainless steel suppliers increased by between €173 and €184 per tonne. Consequently, while there were moderate reductions to basis values, effective prices grew significantly.

Source: European Steel Review Supplement - EU STEEL PRICES