European steel prices across the board are showing declines in March


European steel prices across the board are showing declines in March – a development that has come as a surprise to those of us who were expecting the first few months of 2005 to see steady market conditions.

The dips are affecting all major carbon steel products.

Customers are holding off from placing fresh orders, and less than the normal volume of agreements for new business have been reported this month. They are living off stocks that have been mounting since the latter part of 2004.

Buyers placed orders with local mills for more steel than they needed during the panic-buying period of last year, in an attempt to secure supplies at a time of shortage. They also turned increasingly to imports in the last few months of 2004. The tonnages that were purchased then have now arrived, and are contributing to the overhang of unused stocks.

Suppliers seem to have misjudged the quantity of steel in the market. Real consumption in the EU -15 appears to have gone up by less than 3 percent last year. Figures from the producers’ organisation, Eurofer, show that EU mills increased deliveries into their domestic market by no less than 5.7 percent in the same period – double the rate of growth in actual consumption. Imports also expanded quite strongly in the second half of 2004. Estimates suggest they rose by about 15 percent year-on-year and are thought to be remaining high in the first few months of 2005.

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