European steel market participants are assessing the impact of the war in Middle East, with steelmakers and importers largely ambivalent about a direct impact on spot steel prices but suggesting that, alongside ongoing conditions in Europe, they could be supportive of current bullish supply-side dynamics.
Sources said that in terms of raw materials, they have not been disrupted, while they were mainly concerned in the future for high energy and freight costs, as shipping could continue around the Cape of Good Hope instead of the Suez Canal.
One Europe-based mill source anticipated potential shipping delays from Asia due to the conflict, increasing the risk of exceeding the safeguard quota and higher freight and insurance costs.
“I think another problem is that shipments from Asia may need 4-6 weeks longer,” the mill source said. “I know some companies that bought material for the end of Q2, and if the material arrives late in July, they could have a major problem.”
Similarly, a second EU mill source cited price increases due to uncertainty arising from the War, as well as longer-term regulatory measures impacting EU markets.
Nonetheless, several market participants suggested that although the war was adding further uncertainty to the market, it was also a supply-side driver and would not address the continued sluggishness of demand.
A European service center suggested he was shielded from any immediate impact to import prices attributed to higher freight rates and potential disruption, due to pivoting toward domestic suppliers ahead of the 2026 start date of the EU’s Carbon Border Adjustment Mechanism. “There could be panic buying, and if the domestic market can increase, it will, as nobody could offer from abroad,” the service center source said. “But we aren’t buying anything on imports, so we aren’t too impacted.”
A non-EU mill source said that the Middle East conflict could create additional cost pressures to already high energy costs in Europe, adding further pressure to increase prices down the value chain.
“It will be interesting to see how higher prices and low actual demand will interact and what will be the dynamics between the two,” they said. “My opinion is that demand will limit further price increases during the year.”
According to Platts assessments, since the beginning of the year, HRC prices have increased Eur60/metric ton from Eur620/mt based ex-works Ruhr to Eur680/mt base ex-works Ruhr on March 3. This increase has been attributed to factors such as administrative requirements related to the CBAM and expectations regarding trade safeguards. Mills have reported improved margins during this period. Platts is part of S&P Global Energy.
With recent developments in the Middle East, the industry is currently evaluating whether these conditions will persist amid higher costs.
