European long steel prices are increasing, although by less than producers anticipated in January. Several mills tell Kallanish that they expect values to continue rising gradually, and they will try to adopt a rigid stance, as increasing production costs are forcing them to push for further price increases this month.
Some producers in northern Europe confirm they have temporarily halted sales in order to assess the impact of recent rises in energy and raw material costs before issuing new price lists. In several countries, production cuts remain in place to balance supply with demand, as consumption continues to be subdued. One source notes that electricity and gas prices across Europe have risen further in recent weeks, impacting heavily European EAF producers. Another adds that scrap prices have been increasing steadily over the past months, with February bringing additional, and in some cases unexpected, hikes across Europe.
One producer says it has managed to increase its long prices by about €35/tonne ($41.46/t), depending on product, compared with November and early-December levels. However, the steelmaker adds that prices are unsustainable and no longer cover current production costs. Based on today’s cost structure, the producer estimates that the first gategory of sections should be priced at around €770/t delivered, compared with current levels that are €30-40/t lower depending on country. Similarly, mesh-quality wire rod should be priced at least at €650/t, while drawing-quality material should be some €15/t more expensive, for producers to achieve positive margins.
Several buyers argue that passing on price increases downstream remains difficult in this market, particularly for products such as rebar. Rebar consumption remains subdued across Europe, with prices only edging up in January or remaining flat in some markets. However, sources expect demand to improve “after a harsh winter” as the peak construction season approaches.
Some steelmakers in both northern and southern Europe confirm they are reducing output, while others say they are choosing to maintain high production levels in order to avoid higher fixed costs.
Author: Natalia Capra France
