Selling prices of flat product steel grades are under pressure in the EU at the moment and could slip further in the coming months.

However, Sheffield UK based market consultants, MEPS, predicts a price recovery early in the New Year. Supply of steel decreased in the first half 2012 by more than 10Mt compared with the same period 2011, through a combination of reduced output, lower imports and higher export volumes. Production curbs continued into the third quarter. Moreover, import tonnages are likely to stay low because of the long delivery lead times for foreign supply.

MEPS expects substantial further production cuts in the EU in Q4 2012 and the early part of 2013 as mills take extended holiday breaks. This will tighten supply and, in turn, should lead to rising prices in the New Year.

The threat of increased imports from China has not materialised so far. Cheap offers were made but very few were taken up. Total EU imports of Chinese steel, in the first eight months of this year, were almost halved in comparison with the same period in 2011. Chinese sales into the MENA region – a traditional customer base for Southern European mills – have been disruptive. The lost exports for the EU mills have been fed back into the local market in recent months, thus adding extra competition and deflating selling prices.

Source: MEPS