According to the latest MEPS forecast prices for steel strip in Europe during 2006 are likely to be lower than in 2005. Certainly the producers that have tried to impose price increases recently have met with very little success as the market resistance is very strong. Although the overstock situation that played a significant part in last year’s price falls is no longer a major factor, weaker demand has allowed buyers to be “bullish” in their negotiations.
Speaking with UK suppliers since the holiday it is clear that demand is sluggish at the moment and whilst MEPS are seeing signs of increased industrial activity in Germany and France, UK economic activity trends are not encouraging.
In contrast to previous times the European steel producers responded to falling prices in 2005 by cutting production, which may have gone some way toward stopping price slippage. With increased steel production particularly in Asia, repeating that approach this year is likely to result in more imports, thereby negating any benefit to the mills.
In summary it is very unlikely that we will see any general steel price increases in the EU during 2006 and a it is quite possible that prices will slip further, depending of course on demand levels.
Link: MEPS - European Steel Review