EU Steel Industry Pushes for Price Increases Amid Market Uncertainty

The European steel industry is testing market dynamics as major producer ArcelorMittal seeks to increase prices for hot rolled coil. On August 5, 2023, the company announced its intention to raise the price to €610 (approximately $705) per metric ton for deliveries in the fourth quarter. This represents a nearly 3.4% increase from the previous week’s target of €590 (around $685).

Despite this push for higher prices, some industry observers express skepticism about buyer acceptance. One trader noted that offers in the week of July 21 had ranged from €530 to €540 (approximately $615 to $625), reflecting a decline of €10 per metric ton from late June. The trader remarked, “Right now, not yet,” indicating that current market conditions may not favor such increases.

Market Conditions and Future Expectations

The potential for price increases hinges on several factors, including the anticipated revival of construction activity as summer draws to a close. Additionally, the implementation of the Carbon Border Adjustment Mechanism (CBAM), set to take effect on January 1, 2026, adds a layer of uncertainty. Industry sources suggest that this confusion over the CBAM rules may push buyers to eventually accept higher prices. “EU mills are for sure pushing prices upwards due to the uncertainty surrounding CBAM,” the trader explained, emphasizing the importance of clarity regarding the new regulations to ensure continued imports.

Import offers have been reported at €490 (around $565) per metric ton for delivery to European ports. However, the ambiguous nature of the CBAM rules has diminished the attractiveness of these offers, as end users are concerned about potential back charges in 2027 for steel acquired the previous year.

Regulatory Developments and Industry Response

In response to these market conditions, the European Steel Association (Eurofer) is advocating for stronger safeguard measures ahead of the CBAM’s implementation. On July 29, 2023, Eurofer submitted a proposal urging the European Commission to reduce import quotas by 40-50%. The proposal emphasizes the need for enhanced protective measures to support the sustainability of the European steel industry.

Eurofer’s recommendation aligns with the European Commission’s broader initiative, outlined in the “European Steel and Metals Action Plan” introduced in March 2023. This plan aims to replace existing steel safeguards by July 1, 2026, targeting the prevention of global overcapacity in the steel sector. Eurofer’s proposal states, “The ambition, stated in the Steel and Metals Action Plan, of a highly effective level of protection must be translated into a reinforced ambition compared to current safeguard measures.”

The ongoing discussions and proposed changes reflect the steel industry’s efforts to navigate a complex market landscape while responding to environmental regulations and competitive pressures. As the situation evolves, stakeholders in the steel sector will be closely monitoring both pricing trends and regulatory developments to adapt to the shifting landscape.