STEEL GRIPS online - North European steel prices driven mainly by raw materials costs

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North European steel prices driven mainly by raw materials costs

Aug 26, 2010

Consumption of hot rolled coil has remained weak in Northern Europe during the past 12 months. However, state-backed infrastructure projects have stimulated demand and certain items have been in short supply due to a lack of pickling capacity at some of the leading mills. Sales volumes for hot rolled plate have been subdued, although Swedish truck manufacturers have stayed busy and orders from yellow goods, heavy engineering and energy applications picked up in the spring of 2010.

The mills have tried to support selling values for cold rolled coil by restricting their output but competition between stockists has kept end-user prices down. Demand for coated sheet and coil has been reasonably healthy due to good activity in the automotive supply chain – especially in Germany and Sweden. However, the closure of some government car scrappage schemes has slowed consumption.

Suppliers of wire rod and merchant bar have reported some pick up in orders from automotive and other manufacturing customers. Sales of reinforcing bar and structural sections, though, have been very poor. An unusually severe winter in most of Europe, especially Scandinavia, stopped almost all construction activity, even in regions that are accustomed to frozen conditions.

The major European producers of medium sections and beams have suspended their scrap surcharge mechanisms since the beginning of 2010. Consequently, deals for beams are now being made at effective prices.

As demand for flat and long products has been consistently poor for the past year, transaction values have been affected predominantly by the mills’ input costs – particularly iron ore, coal and scrap.

MEPS