Negative Sentiment Continues to Suppress European Steel Prices

The success of price hikes, by European steel producers, is muted. Mill profit margins are unsustainably low, as a result of rising input expenditure. Iron ore costs continue to soar, and those for coking coal remain at an elevated level. Moreover, European steelmakers are battling with increased outlay associated with CO2 emissions. The imperative for steel producers to lift selling values is becoming more acute.

Nonetheless, sentiment amongst steel buyers continues to be negative. Heightened uncertainty, which has been witnessed for the majority of the past eighteen months, persists. Brexit, escalating global trade tensions, slowing economic growth and softening demand, amongst many other factors, have combined to create a scenario in which both end-users and steel distributors are keeping their purchases to a minimum.

Import offers from third country suppliers are, generally, considered uncompetitive, when compared with the prices that can be negotiated with local mills. Nevertheless, substantial volumes of foreign material, in certain steel product categories, that had been stored at the ports, were released when the new quota period opened on July 1. Meanwhile, supply chain participants continue to await the outcome of the European Commission’s review of the safeguard measures. An announcement is expected in mid-August.

Source: MEPS International LtdMEPS European Steel Review