Metalnewsnet 30 Jun ：

European steel market remains depressive for several weeks. A lot of consumers and distributors accumulated stocks actively in March and April to secure from Q3 price hike waited for that time. As a result they have sufficient resources and do not need in essential purchases. At the same time hardening of financial problems in a number of countries of the region, concerns about the second surge of crisis, a deep downturn in construction and stop of recover in European automotive industry led to negative expectations among market participants.

In recent two month without a little, demand for steel products in European Union is on a low level, majority of deals provide purchase of small lots with minimal terms of delivery. With coming of mid-summer negative seasonal factors begin to play more and more remarkable role. And many analysts however are not quite sure the situation is going to improve noticeably as the autumn comes.

Simultaneously European producers of flat steel refuse to release prices which are hold merely the same level since May. Cost of hot rolled coils of local production in EU is within the range of EUR 580 to EUR 610 per tonne EXW, cold rolled coils at EUR 650 to EUR 670 per tonne EXW. Only heavy plate turned cheaper recent month which quotations dropped from EUR 680 to EUR 700 per tonne to EUR 620 to EUR 660 per tonne EXW.

Moreover, Corus, ThyssenKrupp and some other companies announced price increases for July by EUR 50 per tonne. By steelmakers' words they are forced to act in such illogical way by growth of raw materials prices. So a representative of ThyssenKrupp has noticed last week in his interview to Reuters that cost of Brazilian iron ore has risen from EUR 66 per tonne last year to EUR 160 per tonne CIF in the current year which is EUR 2 billion for the company in the annual equivalent.

However prices are determined not only by the level of producers' expenses. That's why price increase for flat products in July doesn’t seem much probable. ArcelorMittal tried to lift prices in the first half of June at its East European mills from EUR 610 to EUR 640 to EUR 650 per tonne EXW but it had to put them back. It seems that in the current situation when consumers are ready to pay higher price for local products with minimal delivery periods and flexible supply terms, quotations of European steel companies may remain at the current level in July as well but low demand will prevent growth.

In opinion of some analysts situation may change in the second half of summer when buyers having exhausted majority of their stocks will have to start its renewal. However it is not a fact they choose production of local producers for that purpose. A great unprecedented discrepancy between local and import prices appeared in EU market. Ukrainian HRC are offered for USD 560 to USD 580 per ton CFR/DAF, Russian material is USD 600 to USD 620 per tonne CFR/DAF. Ukrainian heavy plate is below USD 690 per tonne CFR/DAF.

Yet there is no interest from majority of consumers for these offers but exclusively for the reason they are temporarily not purchasing any material at all. But if the optimists who are waiting for activation of consumer demand in Europe already in the second half of July are right, import products may become more competitive.

(from rusmet.ru)