WEAK DEMAND FURTHER DEPRESSES EUROPEAN STEEL PRICES – MEPS

Prices for hot rolled and cold rolled coil fell slightly in northern Europe in this month. Seasonal factors exacerbated the already depressed market. End-user activity typically slows around the Christmas and New Year holidays and many market participants strive to achieve low inventory targets at the end of the calendar year. Mills had been hoping to increase selling values in December. Their failure in this endeavour looks likely to be repeated in January 2010.

Hot rolled plate prices were largely unchanged from November’s figures. Many observers feel that values had already fallen as far as anticipated in the near term. Selling numbers for hot dipped galvanised products held up better than those for hot and cold rolled material. There are some holes in inventories and car scrappage schemes continue to buoy demand for the automotive sector. Stainless steel prices are still dropping. Low levels of consumption have been compounded by expected further reductions in alloy surcharges.

The picture for long products is mixed. The producers’ scrap extras for medium sections and beams in December were lower than the previous month due to depressed raw material costs during the relevant reference period. However, there were signs of increasing prices for reinforcing bar and merchant bar, which tend to react more quickly to fluctuations in the scrap market. This trend is not yet apparent in the Nordic countries, which tend to lag behind mainland Europe in the respect.

The recent economic events in Dubai may have some knock-on effects in the European steel market. Turkish steelmakers are major suppliers to the Middle East construction industry and will be seeking alternative outlets for their material.

Source: European Steel Review Supplement - EU STEEL PRICES