What’s Behind Declining Steel Prices in Northern Europe?

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Hot rolled coil steel prices in northern Europe began declining over the past month. Sources told MetalMiner on April 25 that the downtrend was largely due to lower demand and aggressive import offers. One trader mentioned that North European mills are now offering €820 ($900) per metric ton EXW for August rolling and September delivery. This represents a decline from the €900 ($990) reported in late March. At least one mill is trying to hold onto €900 ($990), the trader said, though there are simply no takers on that level.

Meanwhile, reports of stoppages at ArcelorMitttal plants in Gijon and Dunkerque earlier in April have not placed any upwards pressure on current prices. According to the executive European Commission’s February analysis, the European Union will likely avoid a recession in 2023. However, GDP in the 27-member bloc may grow by just 0.8%. The EC also stated that the inflation outlook for the EU is 6.4%.

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Steel Prices Remain Largely Affected by China

Overproduction of steel by Chinese mills in Q1, plus reports that they are now targeting Southeast Asia with flat-rolled product, prompted mills in that region to target the European market. Due to these actions, a disparity was created with steel prices between local and import offers across Europe. Indeed, the former is now €150 ($165) per metric ton lower in some cases.

“That is a problem,” one trading source said. For instance, sources say Taiwanese mills are now offering €680 ($745) per metric ton CIF for August delivery to European ports. There were also reports of Vietnamese mills offering €665 ($730) per metric ton CFR.

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Some analysts say China’s gross domestic product grew 4.5% year on year. However, media reports and traders say that concerns remain over investment decisions in the country. There are also doubts about the outlook for the remainder of 2023.

China sank by nearly 20% year on year in the first quarter of 2023, magnifying woes in the country’s debt-ridden property sector,” the website Trading Economics stated. “On top of that, 40% of steel furnaces in the Chinese hub of Hebei were forced to shut down for maintenance, limiting iron ore purchasing.”

Trading Economics noted that benchmark 63.5% Fe iron ore has also steadily declined since March. The numbers closed at $109.50 per metric ton CFR Tianjin on April 24. This represents a decrease of almost 18.6% since the index reached a high of $134.50 on March 15. Experts continue to keep their eyes on steel prices and how this will impact the steel market globally.

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