The European steel industry is still assessing the conflict in the Middle East
Participants in the European steel market are assessing the consequences of the war in the Middle East, while steel producers and importers are generally ambivalent about the direct impact on spot steel prices, but assume that, along with continuing conditions in Europe, they can contribute to the current supply growth dynamics.
The sources said that there were no disruptions in terms of raw material supplies, while in the future they were mainly concerned about high electricity and freight costs, as shipping could continue around the Cape of Good Hope rather than through the Suez Canal.
One of the sources at the European plant foresaw possible delays in deliveries from Asia due to the conflict, which would increase the risk of exceeding the protective quota and increase transportation and insurance costs.
"I think another problem is that shipments from Asia may take 4-6 weeks," a source at the plant said. "I know several companies that have purchased materials by the end of the second quarter, and if the materials arrive at the end of July, they may have serious problems."
Similarly, a second source at the EU plant cited higher prices due to the uncertainty caused by the war, as well as long-term regulatory measures affecting EU markets.
However, several market participants suggested that although the war has added uncertainty to the market situation, it has also affected supply and will not affect the ongoing decline in demand.
The European Service Center suggested that it was shielded from any direct impact on import prices associated with higher freight rates and potential disruptions due to a shift to domestic suppliers ahead of the start date of the EU carbon dioxide emissions control mechanism in 2026. "Panic buying is possible, and if the domestic market can increase, it will happen because no one can offer anything from abroad," said a source at the service center. "But we don't buy anything by import, so it won't affect us too much."
A source at non-EU enterprises said that the conflict in the Middle East could create additional price pressure on the already high energy prices in Europe, leading to further price increases along the entire value chain.
"It will be interesting to see how higher prices and lower actual demand will interact and what the dynamics between them will be," they said. "I believe that demand will limit further price increases during the year."
According to Platts estimates, since the beginning of the year, prices for HRC have increased by 60 euros per metric ton from 620 euros per ton to