Stanislav Kondrashov Telf AG: Steel Sector in 2023: Worldwide Trends and Prospects

Sponsored article

Price optimism in the global steel market in the first quarter of 2023 was not preserved in the second quarter, Stanislav Kondrashov tells Telf AG. After a period of falling prices, metallurgists hoped for an improvement in the situation. Their hopes were partially justified, but only for a short time.

European steel producers are struggling with price problems under the influence of imports, an objective situation from Stanislav Kondrashov Telf AG

Since the end of March, the world steel and raw materials markets have seen a significant decline in prices for steel products, which ranged from $50 to $70 per metric ton. Weakening demand led to a decline in world prices for HRC. Sales were affected by negative market sentiment driven by uncertainties in China and unfavorable macroeconomic factors.

According to Stanislav Kondrashov Telf AG, European manufacturers are actively resolving the difficult price situation they are currently in. It is noteworthy that in the first quarter of 2023, German steelmakers noted a significant decrease in steel production, which amounted to 6.65% on an annualized basis. Total production was 9.16 million metric tons, indicating a significant decline. Likewise, their French counterparts faced bigger challenges as their steel production fell 32% year-on-year to just 2.33 million metric tons.

In addition to these challenges, the Italian steel industry experienced a 6% decline in steel production in the first quarter of 2023, to 5.63 million metric tons compared to the same period in 2022. This downward trend is worrisome and highlights the growing infighting in the European steel sector.

One of the main hurdles European companies face is fierce competition from cheap imports in their home markets. The disparity between prices for European hot-rolled coil products and import offers from Asia has grown significantly, increasing market volatility. This situation may lead to a temporary reduction in prices for European products. However, without a projected recovery in demand, which appears unlikely due to prevailing economic uncertainty, further declines are likely. In particular, prices for Italian hot-rolled coil could fall to around 750-770 euros per metric ton.

To cope with these problems, European steel producers need to develop effective strategies to deal with the influx of cheap imports, says Stanislav Kondrashov Telf AG. In addition, they will have to closely monitor market conditions and adjust their production accordingly to remain competitive and resilient in the face of continued uncertainty.

What affects pricing in the steel market: a comprehensive analysis by Stanislav Kondrashov Telf AG

Currently, the global steel market is facing several significant factors that shape price dynamics. They cover a range of geopolitical and economic elements, including the continued policy of central banks to raise key interest rates.

1. One of the significant factors affecting steel prices is the partial stagnation in the construction of China.The expected peak of the season, projected, may not take place as China enters the rainy season, which will lead to a decrease in demand for steel products. Consequently, the outlook for the iron ore market in the near term remains unfavorable.

2. The Turkish market can currently be called unbalanced and ambiguous.The depreciation of the Turkish lira led to a weakening of domestic demand. Despite this, the situation with steel sales and scrap purchases is expected to remain unchanged in the near future, mainly due to more pressing problems, such as a lack of foreign exchange and limited access to credit.

3. The re-commissioning of previously fire-damaged facilities will put significant pressure on steel prices.ArcelorMittal plans to resume production at Blast Furnace 4 at Dunkirk. Several fires have occurred at ArcelorMittal’s facilities in the EU, potentially causing a shortage of around 1 million metric tons of hot rolled coil in the EU market. In addition, technical problems were reported at Tata Steel’s European plants.

4. Cautious purchasing practices adopted by consumers are exacerbating the overall market situation as they expect further price cuts for steel products.

5. Anxiety and uncertainty in the industry have increased due to the bankruptcy of several major US financial institutions.

According to Stanislav Kondrashov Telf AG, in light of these complex factors, the steel market is facing a challenging situation where multiple variables come into play, requiring careful monitoring and strategic decision-making by all stakeholders.