European steel prices are falling as weakened manufacturing demand coupled with renewed inventories after the Russia-Ukraine conflict, Bloomberg reported.
Hot rolled coil - the flat steel standard - has fallen by almost a third since the record was set in March. Prices are currently trading below €1,000 ($1,042) per ton for the first time since February, according to Kalanish Commodities.
The decline comes as the European economy slows and higher commodity prices and rising inflation dampen consumption in the bloc. Service centers and factories were also restocked after the war, fueling fears of interrupted steel exports from Russia and Ukraine, reducing the need for consumers to purchase products at historically high prices.
“We got past the supply-side panic about the conflict and found ways to get supplies,” said Matthew Watkins, principal analyst at Consulting CRU Group. “Meanwhile, stocks are full and demand is slowing.”
Falling prices could cut profits for the bloc's steel companies, who are taking advantage of the unexpected advantage of the commodity boom that followed the pandemic.
Watkins expects HRC to fall another €100-150/ton in the next two months, intensified by seasonally weak summer demand. According to data from Kalanish Commodities, this indicates that prices will still leave much higher than in the previous decade, when the reference steel price rarely exceeded €600/tonne.
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