6 June 2023 – The European Steelmakers Association expects an increase in steel demand in Europe. For 2024, it could even go up by more than 5%. Are EU stainless steel mills really suffering from import pressure? And freight rates from Asia to North America are bouncing back.
EU steel demand expected to rise again
After the European Union has waved through CBAM, Safeguard, Waste Shipment Regulation, ETS trading and presumably a few more market protection measures and subsidies, the EUROFER Annual Report 2023 is now more positive again. And, drawing a few possible scare scenarios, of course, it is assumed that demand in the EU will pick up again from the second half of 2023. And from 2024 it is even expected to shoot up by 5.4%.
EU stainless steel producers still under pressure?
The supposedly terrible pressure on EU stainless steel mills from imports quickly loses a lot of pressure if it is simply contrasted with the exports of EU producers. But what the EUROFER probably forgot to mention in its annual report. If one looks at the figures in more detail, it could quickly become apparent that the imports of flat-rolled stainless steel in 2022 have increased to the same extent as the deliveries of the mills have decreased.
The figures do not add up
And here one only has to recall that actually all European stainless steel mills had reported production cuts for the second half of 2022 due to high energy costs. According to the 2022 annual report of a major European stainless steel group, however, its total deliveries have increased by almost exactly the amount that is now being proclaimed as a massive increase in flat-rolled imports on the part of EUROFER. And this with the EAFs shut down?
Rebound in ASIA-U.S. freight spot rates
Shipping lines have experienced a notable rebound in Asia-U.S. spot rates, signaling a recovery in the industry. After a general rate increase (GRI) on Thursday, rates have risen from the previous lows witnessed after the April 15 GRI. According to the Freightos Baltic Daily Index (FBX), China-West Coast spot rates have surged by 11% since the recent GRI and an impressive 44% since the April 15 GRI. Similarly, China-East Coast rates have seen a 6% increase since the most recent GRI and a significant 17% rise since the April 15 GRI.
Shanghai Containerized Freight Index has recorded a 5% growth
In addition, the Shanghai Containerized Freight Index has recorded a 5% growth in the week ending Friday. With expectations of increased volume during the peak season, driven by the shipment of holiday goods, the industry is showing signs of a gradual recovery. While annual contracts have been affected by the impact of COVID-19, overall contract commitments have remained relatively stable compared to the previous year.
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