Large projects to support UK steel demand

Improving UK steel demand in 2025 is likely to be supported by new construction projects as interest rates start to trend lower, market participants said at last week’s joint NEASS & ISTA meeting attended by Kallanish.

“I think 2025 will be slightly better than 2024, but I don’t think it’s going to be what we want or need,” said Tom McDougall, commercial director at All Steels Trading. “I think we’re waiting for 2026 before the cost of finance comes down and there are some bigger projects looking to take shape – data centres, infrastructure projects.”

He noted for the recently announced price increase by ArcelorMittal to be successful, certain factors would have to happen, aside from increased demand, which remained lacking.

“The influence that will potentially have some impact is the British Steel situation; they are potentially looking at shutting the blast furnace down and introducing importing slabs and billets for the re-rolling production. We believe there’s a shortage in stocks, and part of the reason for that, to some extent, is the British Steel situation,” he noted. He added the firm is “usually able to infill off stock levels [from their own warehouses].”

“From an outside perspective, it appears their warehouse space is being used up for rail stock … They [may] think there will be a transitional period between getting the re-rolling lines up to speed and shutting the blast furnace, and therefore might need some contingency stock in place on the rail,” McDougall continued.

He is currently seeing holes in stock levels for some long products, especially sections.

Mike Astbury, head of UK sales at ArcelorMittal Distribution, also noted a current lack of product availability from British Steel.

“There is a big question mark with regards to the future of British Steel, what will happen either way and what kind of timescale will there be for any transition,” he added.

He also foresees 2025 being an improvement on 2024, which he said has been “worse than anticipated”.

“There are several significant projects which have got the go ahead. London seems to be coming back to the market,” he continued. “Data centres are now going to be the bedrock and saviour for sections for the next 2-3 years,” he said, adding that Amazon was also building significantly sized distribution centres.

Rob Ridge, strategic business development director at Barrett Steel, additionally saw that there were some reasonably sized projects.

“Going into 2025 we are seeing some very large projects coming through … It’s a step in the right direction; cash is now being released to fund these large projects,” he said.

Julian Thompson, managing director at Salzgitter Mannesmann UK, concurred on more positivity for 2025, amid a return of London high rise projects, and new data centres. However, he also had concerns over the future of British Steel.

“The British Steel question marks hangs over everybody, and that could be quite significant for next year’s demand,” he said. “If there’s more trouble to their production and it gets worse, then there will be more imports required.”

Sentiment was mixed during the meeting, with other participants noting some projects were more than a year away and were not seeing the funds being released. Falling interest rates would take time to filter through during 2025 and would not return to the very low levels previously seen.

The demand picture remains unclear, with many customers not in a hurry to buy, limiting growth, while others saw demand stabilising across the various steel product groups.

Approached by Kallanish on Friday for comment about the blast furnace shutdown reports, British Steel said: “We are in ongoing discussions with the government about our decarbonisation plans and the future operations of our UK business. While progress continues, no final decisions have been made.”

Carrie Bone UK

kallanish.com