The metal processing industry in Europe is suffering from an unprecedented steel shortage. For months, the metal industry and its representatives have been pointing this out. But 12 EU member states, in cooperation with the lobby organization of European steel producers EUROFER, continue to try to prevent an improvement of the situation. Now EUROFER itself says that demand in Europe is significantly higher than supply.
Margins of steel producers continue to grow
Since the beginning of the year, prices for hot-rolled coil in the EU have again increased by at least 20%. This was reported by Deutsche Bank in a recent newsletter.
As steel prices have increased more significantly since the beginning of the year than the prices of the iron ore required for production, the profit margins of steel producers are also growing.
EUROFER forecasts significant steel shortage in 2021
EUROFER, the trade association of European steel producers, forecasts that demand for European steel will increase by more than 13 percent this year; at the same time, supply is expected to rise by only 7.4 percent.
Despite this dramatic undersupply of steel and stainless steel, EUROFER has persuaded 12 EU member states to press ahead with an extension of the EU Safeguard measures. The EU Commission has already launched a formal review process.
Associations call on EU Commission to end Safeguard
At the same time, associations of the processing downstream metal industry are calling for help. Steel shortage and escalating delivery times into quarters 3 and 4 of the current year. Exploding prices for steel. And no possibilities to import material reliably and predictably.
The EURANIMI association has just stated in a letter to the EU Commission, which we were allowed to see, that “EURANIMI also points out that there is currently an extreme shortage in supply, which could be exacerbated by a continuation of the safeguard measure and thus cause considerable damage.”
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European steel and stainless steel market suffers shortages
Several market sources have directly confirmed to us the shortage in steel supply. And referred to delivery times for August and September. There is also an unconfirmed rumor that Finnish stainless steel producer Outokumpu is planning a major maintenance operation for September 2021. This is likely to further exacerbate the supply situation.
Prices in the EU continue to point significantly upwards
There is also much to suggest that stainless steel producers in the EU are continuing to keep prices artificially high. The recent drop in nickel prices, triggered by China’s TSINGSHAN Group, has not been passed on to customers but priced in other raw materials.
“Our customers are expecting price cuts due to the fall in nickel,” one market participant told us. “But EU mills continue to raise prices, which we are then forced to pass on,” the source continues.
Why do EUROFER and EU member states want to continue hurting the downstream industry?
All indications are that the EU Safeguard measures are causing massive damage to the European economy. And domestic steel and stainless steel mills are unable to meet demand. So we ask ourselves, why isn’t immediate action being taken here in line with WTO rules and an end to the Safeguard measures being declared?
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