DOWNWARD TREND IN NORTH EUROPEAN STEEL PRICES TO CONTINUE - MEPS

MEPS (International) Ltd. has observed steel prices decreasing for most products in northern Europe in November. Several producers relit blast furnaces in recent weeks, having perceived an upturn in demand based on increased buying volumes in the third quarter. In fact, this burst of purchasing activity was driven by stockists replenishing inventories while selling values were low and predicted to rise. Now, demand is extremely weak. The mills are committed to higher output rates. Even operating furnaces at their minimum production levels will result in excess material on the market in the early part of 2010. This will put negative pressure on prices.

Some international traders appear to have drawn the same conclusions as the European mills. Steel is being shipped to Europe from China, Taiwan and Korea. However, most buyers are reluctant to gamble on long leadtime material when the future of local prices is uncertain.

Demand for some zinc-coated items is holding up better than for other products. This may be short lived. The ending of government car scrapping schemes will reduce the consumption from the automotive sector that has supported many steel industry participants during 2009.

Long products prices are also showing a consistent downward movement. The exception is drawing quality wire rod, for which sustained reasonable purchasing levels have enabled suppliers to carry over selling figures from October. Weak demand for scrap pushed down ArcelorMittal’s scrap surcharge for medium sections and beams by €35 to €75 per tonne. Peiner Träger and Gallardo reduced their surcharges by €32 and €33 per tonne, respectively. Consumption of reinforcing bar is seasonally low due to the slowdown in construction work during the winter period. This has combined with falling scrap costs to drive down selling values.
 

EU STEEL PRICES