Buying panic in the European steel market subsides

European steel prices continued to rise in the second half of March. By early April, this upward trend had largely stopped. The panic of buying subsided. Prices for hot-rolled coil in some regions began to decline.

At the height of the war in Ukraine, European steelmakers were facing cost spikes and supply disruptions. Most offered only limited sales volumes before dropping out of the market periodically. Prices increased with each new tranche of offers. Some remained active but tried to limit orders by offering very high prices.

Distributors and service centers increased their resale value during March to conserve inventory and serve loyal customers. Initially, the rapid rise in prices stimulated panic buying. This madness subsided as soon as consumers satisfied their needs.

Most distributors had sufficient supplies when the conflict in Ukraine began. However, a reluctance to replenish stocks at peak levels amid declining mill availability, coupled with high volumes of end-user purchases, has led to a reduction in stocks. Purchasing managers are faced with a choice between reordering at current prices or letting stock gaps occur.
Stock financing in these circumstances is one of the main considerations. There is a fear of falling prices and devaluation of shares. Equally, high steel costs and domestic inflation could delay new projects, lowering actual demand.

The steel market in the UK followed the same pricing model as in the EU. More and more buyers are relying on domestic supplies. Quota limits, high transport costs, delays in crossing the English Channel and congestion in ports on the east coast reduce the attractiveness of the market for EU steel mills.

UK Customs has determined that commercial bar with a high copper content is classified as an alloyed material within the quotas. Basic structural steel made from EAF typically has a copper content above 0.40 percent and therefore falls under the definition of an HMRC alloy. This increases the likelihood of a shortage of this product. Supplies from Liberty Merchant Bar are extremely limited amid the group's proposed restructuring plans. The transfer to Liberty Liège, Belgium is reported to reduce the credibility of the group's operations in the UK.