Healthy construction demand and increased activity from the auto sector are likely to push up northern European prices for hot rolled coil in January and into February, following decreases from the previous month, sources stated. Mills are now transacting material at around €900-920 ($1,020-1,045) per metric ton exw, down from previous transactions €980-1,000 ($1,110-1,135) heard in late December.
Cold rolled coil normally carries a premium of €80-120 ($90-135) per metric tons.
Turkish imports
An onslaught of imports from Turkey, where producers targeted Europe in response to hyperinflation in that country, had put downward pressure on domestic prices for the flat-rolled product.
Related: Oil Prices Stable After API Reports Small Crude Draw
Indian producers were also targeting Europe with offers of as low as €820 ($930) per metric ton CFR Europe.
Besides the imports, a rapid rise of infections from the Coronavirus’ Omicron variant had stifled activity in December, as European states had introduced restrictions in response to it. Netherlands had also declared a lockdown on Dec. 18, but started to ease restrictions starting the previous week.
Restocking needed post-Covid restrictions
Many end users now need to restock material, the source added which will drive up prices.
Steel prices also normally rise in anticipation of warmer weather, meaning increased construction work.
Demand for flat-rolled products from the auto industry is also rising as the deficit of microchips that hobbled the auto sector in 2021 has started to improve, the trader said.
That deficit nonetheless still exists, however, other reports noted, and will likely continue into 2023.
Strong steel demand
One analyst also agreed that steel demand outside of China will be strong as economies bounce back from the COVID-19 pandemic economic stimulus programs by various national governments.
Production restraints as part of decarbonization efforts in China, however, are likely to see crude production there remain static at about 1.03 billion metric tons, the analyst noted.
Iron ore restocking by Chinese end users will nonetheless translate into higher prices for end-users elsewhere, the analyst added.
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The benchmark price for 63.5 Fe fines was $129.30 per metric ton CFR Tianjin, from a low of $80.85 on Nov. 15.
Heavy flooding in Brazil’s Minas Gerais State in the past week has also negatively impacted mines in the area, with many producers having shut down their operations.
By AG Metal Miner
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