Steel prices in the EU - peak or plateau?

The rapid rise in European steel prices came to a halt in early February as buyers received the latest news on the development of the scrap market in Turkey. The approaching Chinese New Year has reduced activity in the Far East. European participants in the supply chain are now pondering the prospect of price reductions in the coming months.

Imported scrap prices in Turkey rose sharply to USD 500 per tonne in December 2020 and the first half of January this year. However, local residents' concerns about market volatility drove prices down by about 20 percent by early February. This caused a decline in European prices for goods that are closely associated with the movement of scrap, in particular for reinforcing bars. Other structural longs followed suit. However, the first signs of a resumption of the rally in the Turkish scrap market are clear. Buyers of steel using a wait and see attitude may need to react quickly.

Much of the European market has been looking at the situation in China to indicate a clear direction after the New Year's celebration ended. Many are optimistic that China will continue to import steel, supporting strong global steel demand. However, the signals are mixed. The new regulation has certainly increased the initial interest in imported scrap. Subsequently, purchases were suspended to prevent overheating of prices. New government spending is expected to boost steel demand, but isolation from the coronavirus could dampen activity, creating a surplus for exports. Competitive offers have already been received from Chinese suppliers in various regions, including Africa and the Middle East.

European flat products continue to push for higher prices, but with little success. The market leader recently announced a new minimum baseline for hot rolled coils at € 750 per tonne. This was mainly seen as an attempt to build on previous gains. Other producers are less ambitious to follow this step. The market is on a plateau, but not necessarily at its peak.

The mills' drive to maintain selling prices is certainly justified for products with limited availability. Cold rolled coils and coated sheets are proving difficult in the supply chain. The European values ​​for these products remain unchanged. Likewise, wire rod prices are holding up. Products with lower demand, such as structural longs, are less stable.

Increased delivery times, due in part to a reduction in coil capacity in Europe, have allowed the mills to remain optimistic. Import offers were of little interest. However, today coil offers from South Korea