Report Claims Northern European Steel Prices Have Peaked

MEPs report also notes that scrap markets have dipped over the past few weeks.

June 24, 2010

According to the most recent report by the British steel research group MEPS, prices for third quarter flat products contracts in Northern Europe will be considerably higher than those set for the April-June period. However, where there are monthly or spot arrangements, ex-mill values have changed little in the last four weeks.

Producers have been quoting increased selling figures, but many customers have built inventories recently and are able to delay booking material for delivery after the summer shutdown, at which time they believe it may be cheaper.

Current long products pricing patterns are largely determined by the key raw material of the supplying mill. Iron ore prices remain high, and this has supported the value of products made via the blast furnace route.

The market for scrap has dipped in recent weeks, and this has quickly been reflected in lower figures for structural sections and reinforcing bar, used in construction projects. This trend is unlikely to be reversed in the near term.

Basis values for stainless steel sheet and coil grew a little in June. Market participants do not foresee further increases in the short term. Many customers bought ahead while the market was rising and now have plenty of stock. The outlook for demand is, consequently, subdued. Lower alloy surcharges are anticipated for July. This is reinforcing the “wait and see” strategy of many buyers. Some material is arriving from the Far East, having been bought at the lower prevailing prices in February or March.