European Steel Prices Climb on Trade Policy & Energy Costs

Key Factors Driving Steel Price Surge

European steel prices have increased by approximately €100 per tonne year-to-date, a trend attributed by Bank of America analysts to the Carbon Border Adjustment Mechanism (CBAM), stable demand, and rising energy and shipping costs.

Market Overview and Production Data

Hot-rolled coil (HRC) spot prices are now near €700 per tonne, up from an average of €660 per tonne in the first quarter of 2024. This represents a 10% year-over-year increase. Concurrently, data from the World Steel Association shows that European Union steel production remained largely flat, declining 1% year-over-year during the first two months of the quarter.

Economic Impact and Future Forecasts

Analysts estimate that higher energy costs contribute about €20 per tonne to the price gains, while elevated shipping costs are promoting a regionalization of global steel markets. Bank of America has upwardly revised its steel price forecasts, projecting HRC to reach €730 per tonne in 2024, partly due to tariff rate quota implementations in July. This outlook suggests a potential 6% upside to ArcelorMittal's fiscal year 2026 consensus EBITDA.

Summary Outlook

The combination of regulatory measures and sustained cost pressures is expected to support European steel prices going forward. The market will closely monitor the impact of trade policies scheduled for the second half of the year.

FAQ

Q: What is causing the rise in European steel prices?
A: The increase is primarily driven by the CBAM trade policy, higher energy and shipping costs, and consistent demand.

Q: How much have steel prices increased this year?
A: Hot-rolled coil (HRC) prices have risen by approximately €100 per tonne since the start of the year, with current spot prices nearing €700 per tonne.

Source: Investing.com