Geopolitical developments are creating potential risks for the steel sector through energy markets. Following U.S. and Israeli actions against Iran, trade flows in the strategically critical Strait of Hormuz and production slowdowns at LNG facilities in Qatar triggered sharp increases in European natural gas prices. In particular, production disruptions in Ras Laffan Industrial City have heightened concerns over LNG supply security.
Energy market analysts note that these developments are likely to keep uncertainty and price volatility in European and global LNG supply on the agenda for some time. However, the recent increase in energy costs has not yet translated directly or clearly into steel prices. Market expectations suggest that any potential cost increases could gradually feed into prices over the coming period.
On the labor side, prices have remained stable so far, while demand continues to be subdued. Market participants are concerned that rising energy costs and geopolitical risk speculation could trigger a domino effect, impacting production costs, final product prices, interest rates, inflation, and, most importantly, demand contraction. At the same time, although a potential government change in Iran could create long-term commercial and energy opportunities for Europe, its short-term impact on price formation is expected to be limited. Overall, the expectation is that prices may remain under upward pressure, even if driven solely by speculation, but increases are likely to remain controlled due to weak demand.
The European steel market concluded the past week with a sideways-to-positive trend, under the shadow of macroeconomic uncertainty and supply-demand imbalances. I-beam prices remained balanced at €750–770/t CPT across the continent, while commercial rebars traded within the €665–675/t CPT range. In Germany, the key driver for Northern Europe, construction rebar offers increase to €615/t CPT, confirming the impact of logistics costs on final prices. Poland showed a similar pattern, with filament coil prices holding within the €635–660/t CPT range. In Southern Europe, Italy’s construction rebar prices continued to display competitive differentiation, trading between €565–600/t EXW.
Additionally, high volumes of flat products have been reported shipped from Vietnam to Europe. Products such as PPGI, CRC, and HRC are being sold to European customers at prices that appear lower due to CBAM application based on declared values rather than the EU’s default values. According to experts, this represents a price gap of approximately €120/t, posing a considerable risk. If the European Commission does not approve the declared values in October, traders may be required to make substantial additional payments.
Overall, European steel prices showed a sideways-to-mildly upward trend this week. Expectations of rising energy costs have led to cautious pricing behavior in the market. However, weak demand continues to prevent upward movements from developing into a strong or sustained trend.
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