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Is the European Steel Crisis Coming?

[vc_row][vc_column][vc_column_text]Europe has been busy lately. The multiple supply shocks of oil, natural gas and food have overwhelmed them, but now they are faced with the looming steel crisis.

 

Steel is the foundation of the modern economy. Everything from washing machines and automobiles to railways and skyscrapers is a product of steel. It can be said that we basically live in a steel world.

 

However, Bloomberg has warned that steel may soon become a luxury item after the Ukrainian crisis started to soar across Europe.

 

  • Under the tight supply, steel prices have pressed the “double” switch

 

The cost of steel, which makes up 60 percent of the weight of an average car, has risen from 400 euros per ton in early 2019 to 1,250 euros per ton, according to worldsteel data.

 

Specifically, European rebar costs have soared to a record level of €1,140 per ton last week, up 150% from the end of 2019. At the same time, the price of hot rolled coil has also hit a record high of around 1,400 euros per ton, an increase of nearly 250% from before the pandemic.

 

One of the reasons why European steel prices have soared is the sanctions imposed on some steel sales in Russia, also involving oligarchs that own a majority stake in Russia’s steel industry, the world’s third-largest steel exporter and Ukraine’s eighth .

 

Colin Richardson, steel director at price reporting agency Argus, estimates that Russia and Ukraine together account for about a third of EU steel imports and nearly 10% of European countries’ demand. And in terms of European rebar imports, Russia, Belarus and Ukraine can account for 60%, and they also have a large share of the slab (large semi-finished steel) market.

 

In addition, a steel dilemma in Europe is that about 40% of the steel produced in Europe is produced in electric arc furnaces or small steel mills, which use a lot of electricity to convert scrap iron compared to iron and coal production. Melt and forge new steel. This approach makes small steel mills more environmentally friendly, but at the same time brings about a fatal disadvantage, that is, high energy consumption.

 

Now, what Europe lacks most is energy.

 

Earlier this month, European electricity prices briefly exceeded a high of 500 euros per megawatt-hour, about 10 times what they were before the Ukraine crisis. Rising electricity prices have forced many small steel mills to close or reduce production, only operating at full capacity on nights when electricity prices are cheaper, a scene that is being played out from Spain to Germany.

 

  • Steel prices may rise in panic, making high inflation worse

 

There is now industry concern that steel prices could rise sharply, possibly by another 40% to around €2,000 a tonne, before demand slows.

 

Steel executives said there is a potential supply risk for rebar if electricity prices continue to soar, which could prompt more small European mills to close, a concern that could spark panic buying and push steel prices further. high.

 

And for the central bank, soaring steel prices could add to high inflation. This summer, European governments may have to face the risk of rising steel prices and potential supply shortages. Among them, rebar, which is mainly used to strengthen concrete, may soon face a shortage of supply.

 

So what is happening now is that Europe may need to wake up quickly. After all, based on past experience, supply chain tensions have spread faster than expected, and the impact has far exceeded expectations, plus few commodities can be as critical as steel to so many industries. important. (Securities Star)[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_btn title=”About LMM GROUP” link=”url:https%3A%2F%2Fwww.lmmgroupcn.com%2Fabout-lmm%2F|target:_blank”][vc_column_text css=”.vc_custom_1649296177864{margin-top: 50px !important;}”]friendship Link:

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As professional one-stop solution provider, LIAONING MINERAL & METALLURGY GROUP CO., LTD(LMM GROUP) Established in 2007, and focus on engineering research & design, production & delivery, technology transfer, installation & commissioning, construction & building, operation & management for iron, steel & metallurgical industries globally. 

Our product  have been supplied to world’s top steel manufacturer Arcelormittal, TATA Steel, EZZ steel etc. We do OEM for Concast and Danieli for a long time.

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