EU flat product Steel prices to rebound in early 2013: MEPS

LONDON (Scrap Monster): A black cloud hangs over the EU steel market at this time. Selling values are under pressure and could slip further in the coming months, said MEPS International in a snippet.

However, MEPS predicts a steel price recovery early in the New Year. Market supply decreased in the first half by in excess of 10 million tonnes, year on year, through reduced output, lower imports and higher export volumes. Production curbs continued into the third quarter. Moreover, import tonnages are likely to stay low because of the long delivery lead times for foreign supply.

MEPS expects substantial further production cuts in the EU in the final trimester and early part of 2013 as mills take extended holiday breaks. This will tighten supply and, in turn, should lead to rising prices in the New Year.

The hype surrounding the import threat from China has not materialised. Cheap offers were being made but very few were taken up. Total EU imports of Chinese steel, in the first eight months of this year, were almost halved in comparison with the same period in 2011.

Chinese sales into the MENA region – a traditional customer base for Southern European mills – have been disruptive. The lost exports for the EU mills have been fed back into the local market in recent months, thus adding extra competition and deflating selling prices.