Warsaw (Puls Biznesu) – Steel plants and steel distributors are happy while their clients complain about high steel prices which are increasing. This time it is not because of China but because of high demand in Europe.
Steel producers and distributors are pleased because another wave of steel prices increases is coming. They predict price increases. On Friday, ThyssenKrupp said it would raise the prices, which is a Bad sign for many Polish car producers, home builders or home appliances companies which have to buy many steel products abroad.
“We’ve been watching steel products becoming more expensive for several months. Reinforcing bars prices have exceeded to the highest extent. Prices grow every week. We can see price increase of PLN 50 (EUR 12.9) a tone, or even 2.5 percent a week. The situation is similar to what happened in 2004 when steel product prices jumped suddenly”, Grzegorz Dolkowski, the deputy CEO of listed Drozapol Profil, the steel distributor commented.
Jerzy Bernhard, the CEO of rival Stalprofil, added that the price for one tone of reinforcing bars amounts to EUR 480-490. These products are becoming more and more expensive in Western Europe as well. According to Steel Business Briefing, a London agency, a tone costs EUR 494.
Producer prices of hot rolled and cold formed plates fell by EUR 5 for every tone. This kind of steel is used in automotive industry. They cost EUR 492 a tone. However, European distributors say that in the fourth quarter the prices will grow by EUR 30.
“I believe that the growth rate may be similar in Poland, or even higher. However, thanks to strong zloty it won’t be so troubling”, Jerzy Bernhard said.
Some kinds or steel can cost EUR 720 when bought from European distributors. In Germany, where the Polish companies buy the majority of steel products, some kinds of flat steel cost EUR 1,100 a tone. German Salzgitter said it increased steel prices by EUR 60 a tone. British Corus considers price increases of GBP 20 a tone. Arcelor said it would raise prices as well.
When steel prices jumped in 2004, Chinese demand was blamed. Now, it is also European demand to be taken into account.
“Last year, the world’s steel production grew but it fell in the EU. Today, the demand grows dynamically in Europe. The EU is importing more and more steel products. The situation is similar in Poland. Steel storages are empty. This is a sign that demand has grown and so will the prices”, Andrzej Ciepiela, the director of the Polish Union of Steel Distributors said.
In Poland, the booming home building market is another factor increasing the demand for steel products. There are more and more plants of home appliances producers who need a lot of steel plates. Many companies import steel. At the end of May, the imports grew 42 percent as compared to the same period of 2005, and amounted to 2.1m tons of steel.
(PLN 1 = EUR 0.259)