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Cheap European steel

European steel companies have started very bravo current year, having achieved in the first half of January, higher prices for flat and long products of 30−50 euros per tonne. However, the new increase, scheduled for February, did not take place. Quotations of more scarce cold rolled coils and galvanized steel eventually stabilized, and hot rolled coils, heavy plate and structural steel are down slightly in price.

In mid-February, the average selling prices of European companies in the hot rolled steel was around 410−430 euros per ton EXW, fittings and fell to about 380 euros per ton EXW. Recently, a number of companies, however, stated about the necessity of a new rise in prices early in the second quarter, pointing to the raw material price hike and providing opportunity for growth at 50 euros per ton or more, but independent analysts doubt that these plans will be able to fully realize .

According to the British consulting company MEPS, throughout Western Europe, the main problem is the low activity of end users. In conditions of economic instability, most industrial companies do not want to risk investing heavily in stocks. As the CEO of Corus Kirby Adams, currently only about 15% of the company's sales account for long-term (about one year) contracts, the vast majority of buyers prefer to contract for a quarter or even month. In general, according to Kirby Adams, the European steel market will recover no sooner to the level of 2007, than in 4−5 years.

In recent months, the best results in the EU showed the automotive industry, but the excitement it was due, mainly, incentive programs, activities which have already been completed. Future prospects are quite uncertain, so the distributors also prefer to maintain a cautious policy. Although stocks throughout the low, yet the mediators do not tend to their replenishment. However, according to the company the CRU, some consumers, fearing the rise of prices in the second quarter, yet began to show interest in signing new contracts, while the prices did not have time to grow.

On the European market of long products have become a serious problem adverse weather conditions, to reduce the already low demand. More or less stable is the Central European market, especially Poland, which continues preparations for Euro 2012, while the situation is frankly depressing in the Mediterranean countries. In addition, throughout the region and has not recovered the pre-crisis lending mechanism construction.

However, European steelmakers helps euros cheaper. euro exchange rate against the dollar continues to decline at the end of last week, dropping almost to a level of $ 1.35. As a result, the dollar prices of European companies have been significantly below the average world market, especially given the recent increase in the Middle East. Thus, European fixtures, which is offered to North Africa for 360−370 euros ($ 487−500) per ton FOB, Turkey has become cheaper. European hot rolled steel is now quoted at $ 554−581 per ton EXW, is now with him is matched only Ukrainian, which is offered at around $ 570 per ton FOB Ishmael. However, some European analysts still do not exclude the influx of cheap Chinese products after the Christmas holidays on the Eastern calendar.

End of the European problems and troubles have not yet seen, so for the foreseeable future, the market seems unlikely to be very attractive for Russian and Ukrainian suppliers of hot rolled products. However, early in the second quarter of European steelmakers, obviously, will have to achieve a certain increase of prices for their products, but their achievements are likely to be worse than their counterparts in other regions.

Prices for hot rolled coils in the EU (Southern Europe, EXW)

Prices for hot rolled coils in the EU (Southern Europe, EXW)

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