Friday, November 17, 2006

Chinese imports putting European Steel Prices under pressure according to MEPS

Some European steel prices are now quite markedly starting to dip. Stock-building is reaching the end of its current run, and inventory liquidation will no doubt follow. Some producers are restraining their output to avoid excess supply coming onto the market and depressing prices further.

But the market is being influenced increasingly by other factors – principally the supply from foreign sources, and especially China. At least one major EU flat rolled steel producer is indicating it will be offering strip products at unchanged or lower prices in the first quarter of 2007 in order to compete with these imports.

The increase in EU supplies from China this year has been truly startling. For the largest volume product, hot rolled coil, EU imports from China in the third quarter of 2006 showed a tenfold rise on the same quarter last year - from just 56,900 tonnes to 597,800 tonnes. Other products showed even larger jumps – for example, EU imports of Chinese wire rod increased from just 100 tonnes to 206,200 tonnes in the same comparison.

A breakdown by country clearly shows that southern European markets have been absorbing the bulk of the Chinese steel. Of the 1.69 million tonnes of hot rolled coil that China sent to the EU in the first nine months of this year, 1.19 million tonnes or 70 percent went into Italy and another 250,000 tonnes to Spain. Some 175,000 tonnes went into Belgium/Luxembourg – most of it no doubt through the port of Antwerp from where it would be distributed to the markets of northern Europe.


Technorati tags: ,

No comments: