Spanish steel industry going through tough conditions

Spanish steel industry going through tough conditions

The economical situation and the outlook of steel industry are not optimistic at all in Spain. The economic growth forecasted as only 1.6% for the remainder of 2003. Construction business is down more than 10%, and car sales are down by almost 20%, compared to previous twelve months. Under current economical circumstances it is scary for Spanish companies and if conditions do not improve soon, many of them may reduce output or downsize themselves in order not to risk bankruptcy. Consequently unemployment figures will increase. Many Spanish companies hope for potential business contracts as regards reconstruction and exports to Iraq, as the government opted to support the US during the Iraqi conflict. European steel mills had increased their prices quarter after quarter last year. But following the collapse of international markets, and given the very strong Euro versus US Dollar, the base prices of the EU mills are now extremely high compared to imports. As customers opt more and more for imports, the order books of the mills cannot be filled. According to traders; Arcelor has over 30% of its hot rolled capacity unsold for second and third quarters of the year. Other major mills are not in good shape either. International prices have been going down continuously in the market. Cold rolled prices offered to Spanish customers marked a drop of approximately $40/mt during last month. Price gap between EU mill products and imports can be as high as €70/mt in certain cases. Under these circumstances the EU mills may decide to adjust their prices and run a campaign anytime.