Raw materials prices will be supported by demand from China and India in the second half of this year, GMK chief executive Stanislav Zinchenko said at the Kallanish Europe Steel Markets 2024 conference in Milan on Wednesday.
Chinese steel-using sector activity is unchanged from last year, which will help support steel output. Although the country’s real estate sector is experiencing a crisis, other sectors such as manufacturing are helping to offset this.
Apparent steel consumption in China in January-April fell by 7.1% on-year, while average daily trading volume contracted by 5.6% in May. This indicates China could increase its output and apparent steel consumption in the second half of the year. China’s average blast furnace capacity utilisation was 89.5% in May, compared to 86.7% in April.
India’s infrastructure projects will also help support raw materials prices in H2. The country’s apparent steel consumption rose by 9.4% year-on-year in April, while Indian hot rolled coil fob prices increased by $35/tonne in May.
Indian steel demand weakened during the general election, but infrastructure funding is expected to boost demand now the election has been completed. Seasonality will also play a role. Indian demand slows during the monsoon but is typically strong during H2.
GMK estimates rising energy prices have added €8/tonne to Europe’s steelmaking costs. The company predicts business sentiment will improve and steel demand will strengthen in H2. It estimates EU HRC prices will increase by €30-40/t to reach €670-680/t at the end of the second quarter, and prices should reach €700-720/t in Q4, Zinchenko observed.
The price rise will be driven by several factors, including easing import pressure due to import prices not being attractive between April-May, non-competitive India prices and the EU’s safeguard quota revision. Imports should also decline significantly from India, which was the largest supplier of HRC to the EU in H1, Zinchenko concluded.
Suhita Poddar India
