Falling iron ore prices, a seasonal slowdown in demand and the automotive sector hit by a semiconductor shortage are driving down benchmark steel prices across the European continent, Bloomberg wrote Friday. Stock exchange prices for hot rolled coil declined steadily in August after six straight months of growth, bringing European producers one of the highest profits in recent years.
Nevertheless, the rally continues on the other side of the Atlantic. Hot rolled coil futures are approaching to $ 2,000 per tonne, boosted by tariffs on imported goods, which President Joe Biden is in no hurry to abolish. If he did, it could spur European prices up while cooling the prices that American consumers pay.
Of course, European manufacturers and construction companies shouldn't be too happy about the rapid cost reduction. The decline in demand is seasonal and may resume next month.
“If activity picks up in September, prices will remain stable,” said Christian Georges, senior analyst at Societe Generale SA. "The demand for the automotive industry is a constant uncertainty due to a shortage of semiconductors, but the order books are full."
According to the industry association Eurofer, car manufacturers account for about 16% of steel consumption in Europe. The sector suffers from a shortage of semiconductors, forcing the company from Toyota Motor Corp. before Volkswagen AG cut or suspend production in recent weeks.
“Vehicle sales in major European markets are struggling to recover to pre-pandemic levels, which is starting to take a toll on steel orders,” said Grant Sporre, commodities and metals analyst at Bloomberg Intelligence.
