Ex-works base prices in Germany are currently at €420-440/mt for HRC, €460-480/mt for CRC and €550-570/mt for HDG. Producers in this country have increased their prices by an average of €20/mt in the past two weeks. Meanwhile, ArcelorMittal Poland's ex-works base prices in the local Polish market for October production are currently at €410-420/mt for HRC, €460-470/mt for CRC and €510/mt for HDG. Having filled its order books for September production materials, ArcelorMittal Poland has increased its HRC prices by €30/mt, while raising its CRC and HDG prices both by €10/mt. The same trend is seen in northern Europe as is observed across Europe, with demand far exceeding supplies. It is said that the demand in question is coming from stockists and that end-users are still absent from the market. The balance of supply and demand will set the direction of prices in northern Europe (and in Europe in general) after the holidays.
On the other hand, import HRC offers from the CIS and eastern Europe are at €390-410/mt CFR northern and central Europe in general and CRC offers of the same origins to the same destinations at €440-490/mt; these prices are not considered to be competitive in the markets in question. Ex-Far East HDG prices for 0.4 mm 140 gr/m² zinc coated material are at €600-610/mt. On the other hand, ex-Indian HDG offers to Europe are far from competitive as the local Indian market is quite lively. Thus, considering that ex-Indian HDG offers to Europe are at higher levels compared to those from China, imports to Europe from the CIS, Far East and India are all far from posing danger to the local European markets. In addition, leading times may extend to three months in new production material from China and India. This is not a desired situation in such an unstable market situation.
However, things may change in the import market situation. If European producers adopt competitive price levels and if some local markets (e.g. Far East and Asia) maintain their rapid decrease, European flat steel export offers may start to exert pressure on the local markets in this region. Import offers do not constitute a potential threat for the moment in Europe as the local markets in the Far East and India are indicating lively demand and as CIS producers are currently more occupied with meeting the demand in these Asian regions. However, the situation in these regions has started to change in the last two weeks. For this reason, it is thought that these strong markets (which have been net importers for a while) could become net exporters again.
In addition, increases in production capacities need to be monitored very closely. If capacity increases exceed demand, any price uptrend may be limited even if demand rises as expected in the post-holiday period. Furthermore, the abovementioned pressure from imports may alter the whole picture. Looking at the World Steel Association (WSA) figures, in the first seven months of 2009 in Europe 73.49 million mt of steel were produced, down 42.1 percent year on year. On the other hand, the figure for the first six months was 62.18 million mt, which was down 43.2 percent compared to the same period last year. It can be seen from these figures that the European steel producers are slowly increasing their production capacities. Under current market conditions, further increases in production capacities will have to be followed with great attention.