Chinese steel mills triumph in Europe

The European Union is fighting a tough fight against dysfunctional steel demand in the end-use segment as the economy struggles to survive and even grow in some countries. A sharp drop in industrial growth and demand from key consumers of the metal, namely construction and auto production, worsened the demand for steel from European manufacturers.

Chinese factories have ruined European metallurgists using the strong euro. The only advantage of European and Russian factories, in shorter delivery times, could not withstand the onslaught of cheap offers from China. At the same time, the weakening of the euro was offset by a drop in the price level of import offers from China. In particular, Italy and Spain have seen a 40-60 percent drop in domestic consumption in the real estate and metalworking sectors.

Prices simply reflect the situation and correspond to real levels. The demand for steel was so terrible that despite the disconnection of the main source of supply from Ukraine, it was not even possible to increase the price due to the shortage. Under normal circumstances, the lack of supplies from the largest Ukrainian factories would lead to a significant rise in the price level in Italy and Spain. On the contrary, prices do not change even when factories have started booking. Domestic steel mills usually tried to maintain a minimum stock in warehouses in an attempt to limit the cost, but still European factories and consumers began to buy out imports, especially those offered from China.

The nearly 20 percent rise in scrap prices over the past 3 weeks was expected to show a surge in steel product prices, but it appears to have limited itself to Turkey and only affected wire rod. At the same time, markets in Europe and elsewhere remained isolated from this growth. Some Russian and Indian factories still maintain the price levels set by Chinese factories. The realities of the future remain ambiguous, as despite the positive economic performance in the European region, the overall market conditions show bleak prospects for European metallurgists, and it seems that the decline in iron ore price levels came with a delay.