European steel producers are considering the possibility of imposing new energy tariffs following a sharp rise in gas and oil prices caused by the US-Israeli strikes on Iran and the ensuing conflict in the Middle East.
The increase in energy prices is expected to further strengthen the upward trend in European countries. Steel prices were previously supported by CBAM taxes and expectations of tougher duty-free quotas to be introduced in the EU and the United Kingdom from July 1. During the transactions, the full extent of any increase in energy prices has not yet been realized. However, metallurgists have taken decisive action in response to the sharp jump in energy prices this month.
- This article first appeared in the March issue of the European Steel Review by MEPS International. The monthly review contains steel prices, indexes, comments, and forecasts for 12 months, covering Belgium, France, Germany, Italy, Spain, and the United Kingdom.[url= / / / /gb/en/pages/contact-meps]Contact the members of the European Parliament for detailed information on how to subscribe.
European Parliament respondents reported that due to rising steel prices on the spot market this month, many previously agreed quarterly contracts are "no longer valid." After the outbreak of conflict in the Middle East, factories are demanding significant price increases. The plants also stated the need to reflect additional energy costs by increasing the existing six-month and 12-month contracts.
In the European spot market, many steel producers withdrew their offers after the initial U.
S.-Israeli offensive on February 28 and only later returned with increased short-term bids.
Shipping problems are an additional factor constraining imports.
Iran's closure of the Strait of Hormuz has cut off the supply routes of 20% of the world's oil and gas supplies. This led to a 50-100% increase in the price of marine insurance in a matter of days. Many carriers have decided to use the South African Cape of Good Hope to avoid the Middle East, as they did during the previous Red Sea crisis. This increases mileage by 3,500-4,000 miles, travel time by 10-14 days, and significant costs.
The Drewry global container index increased by 8% to $2,123 per 40-foot container in the week to March 12, and this sharp increase was largely due to the tariffs for flights on the Asia—Europe route. Spot rates on the Shanghai—Rotterdam trade route increased by 19% to 2 USD,443.
The increased costs and delivery times caused by these shipping issues will be an additional deterrent for steel importers.,
