Although a slight recovery in steel prices seemed to be taking shape in the fourth quarter of 2023, it has not yet really materialised. The economic outlook in China remains weak, which also has an indirect effect on steel prices in Europe.

In Europe, the German market remains very weak, with an overall decline of 5% compared with the same period in 2023, due in particular to a fall in the automotive market. This decline could reach 25%.

As demand remains weak, pushing prices down – despite a small increase of 40/tonne in March – there will continue to be a risk of steel mills closing capacity in order to maintain a certain price level. This type of closure is obviously likely to handicap a future recovery in the event of a sharp increase in demand.

Against this backdrop, steel and stainless steel prices have remained stable at very low levels. Alloy surcharge prices followed the same trend, with a slight upturn in March.

While the third quarter saw a downward trend in steel prices, it seems that the low point has been reached.

The fourth quarter saw a slight upturn in prices.  In Europe, this was mainly the result of production cutbacks at major producers such as Arcelor Mittal and Tata Steel, which shut down several blast furnaces for maintenance and inspection.  This reduction in production volumes is also evident at global level, with output down by 5% in China.

This limitation of volumes has had its effect.  In Europe, this was coupled with specific measures in certain countries, such as Germany, to boost the competitiveness of their industry and thus maintain prices.

There has also been an increase of around 8% in motor vehicle production, particularly in Germany and China, which has supported price rises.

In the stainless steel market, the downward trend in alloy surcharges continued.  However, stainless steel prices remained relatively stable over the period because the rise in steel prices offset the fall in alloy surcharges.

For the beginning of 2024, depending on the commodity, the price of a tonne of steel will vary between €740 and €890 per tonne.

The trend in steel prices was fairly uneven in the third quarter of 2023.

Rising interest rates, persistently high energy prices (even though they have fallen since the crisis in the summer of 2022), the automotive industry, which appears to be stagnating, and the construction industry, which is in decline, are leading to a downward trend in demand for raw materials and therefore for steel.

Furthermore, economic forecasts have been revised downwards in Europe and in most European countries, with Germany even threatening recession.  In addition, the fall in activity in China has meant that many Chinese producers have tried to export more at lower prices.  These increased imports have not yet been cleared through customs, as the quotas for the third quarter have been used up, but they will be in the fourth quarter, which could further depress steel prices.

Other Asian countries are experiencing the same situation, which is not improving demand for steel in general.

Prices per tonne of steel are therefore falling, to around €850 – €890 per tonne.  These are obviously base prices, as there are supplements for different qualities, thicknesses, widths and lengths.

Prices for alloy surcharges for the various categories of stainless steel are also trending slightly downwards.  This drop varies according to the quality of the stainless steel.

In view of these factors, it does not seem likely that prices will rise in the fourth quarter.  They may stabilise if the stimulus measures taken by certain countries begin to bear fruit.

As Filame does on a regular basis, it questioned its panel of suppliers, mainly of steel and stainless steel, to get their forecasts for the next few months for the evolution of the price of these materials.

If the peak had been reached in April 2022, we witnessed a stabilisation and a fall during the third quarter of 2022 in the prices of steel and stainless steel and in particular of the alloy surcharge. However, from September onwards, there was a reversal of the trend and the end of 2022 confirms this reversal of the trend with a fairly significant rise.

This is due to several factors.

First of all, the global market and particularly Asia is booming.  China, which is the world’s largest steel producer with a market share of around 50%, has changed its strategy in several respects.  After a policy of restricting the real estate market to reduce its debt, which led to a sharp drop in housing sales and thus in steel production for this sector, China announced a series of stimulus measures for this sector.

In addition, China has eased its zero covid measures, which is leading to an improvement in demand in the Chinese market.

These two elements, among others linked to a certain recovery of consumption in this market, lead to an increase in the price of raw materials in this market.

In addition, Europe has decided to introduce a carbon tax for non-European companies, which will probably lead to an increase in steel import prices.  At the same time, there is a further reduction in production capacity in Europe.  Several central European mills have closed down blast furnaces, while producers with electric steel mills are shutting them down and restarting them, following the development of demand very closely.  In addition to maintaining prices by reducing supply, this has led to longer delivery times.

This decrease in supply is confronted with an increased demand for steel from the automotive market, which is expected to grow in 2023, particularly as a result of a reduction in supply problems for components such as conductive sills.  The effect is therefore that of an upward price trend.

In the case of stainless steel, an increase in the price of the alloy surcharge was observed in December and January, which was caused in particular by a sharp increase in the price of nickel.  The reasons for this increase are the same as those explained above for steel.  The trend was rather downward in the second and third quarter of 2022.  The increase in nickel prices is generally reflected in the prices of the alloy surcharge within two months.

This evolution will of course have to be correlated with the evolution of the economic situation in general and in particular with the effects that inflation may have on consumption and therefore investments.

A report from the GMK Center indicates that steel production in Europe has been reduced by 11.7 million tonnes, which is a decrease of 6.7% compared to July of last year (2021).  This decrease is due to the closure of several steel mills in Europe, including several of the Arcelor Mittal Group.  At the beginning of September, some fifteen steelworks were shut down.

The closures are due to the increase in the price of energy, which means that producers are no longer able to cover their production costs and are unable to pass on cost increases to their customers, despite the energy surcharges applied by most players.

These closures are in addition to those already announced, such as the closure of the Aperam stainless steel foundry in Genk.

This reduction in supply will eventually have an effect on the price of steel.  It is therefore not to be expected that prices will fall in the coming months.

As the Filame Group does every month, we have consulted our panel of suppliers to provide the most accurate estimate possible of the evolution of the price of alloy extras for the stainless steel grades that the Filame Group uses on a regular basis.

In June, after the surge in May, we saw a drop in prices for the first time. The downturn continued slightly in July.

The decline continued in August.

This seems to reflect a decline in economic activity that began to be felt in June and which is due in particular to the various geo-political events. Economic activity in China has continued to decline and so has demand.
This movement does not mean that we will return to the prices that prevailed in 2019. Indeed, demand for nickel in particular remains very strong and is driven by the demand for this metal in the battery industry.

It should be noted that all suppliers still apply an energy surcharge to take into account the increased energy costs. This surcharge, in turn, continues to rise. The Russian gas crisis is likely to continue to exacerbate the pressure on energy prices.

As a result, the price of stainless steel will not fall in the same way as the price of alloy surcharge.

In addition, large users had hedged their bets during the very sharp increases in the first half of the year and have stocks and contracts to deliver at higher prices than they could obtain today in spot purchases.

Filame points out that the price of alloy surcharges is set month by month by the various suppliers according to the grades of stainless steel they offer. There are therefore differences between the various suppliers but the trend is noticeable for all of them.

Furthermore, the price is set on the day the material is delivered. There may therefore be differences between the time of ordering and the time of delivery, especially as delivery times have not decreased.

It should also be noted that the figures below are a general trend among steel manufacturers and that the price among slitters, wire drawers or wholesalers varies according to the quality requested, the nature of the product (sheet, coil, wire), the quantities requested, the thicknesses or diameters of the wire and the packaging.

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As the Filame Group does every month, we have consulted our panel of suppliers to provide the most accurate estimate possible of the evolution of the price of alloy extras for the stainless steel grades that the Filame Group uses regularly.

In June, after the surge in May, we saw a drop in prices for the first time.

In July, we can see that the slight downturn continues.

This seems to reflect a drop in economic activity that began to be felt in June and which is notably due to the various geo-political events.

This movement does not mean that we will return to the prices that prevailed in 2019.  Indeed, the demand for nickel in particular remains very strong and is driven by the demand for this metal in the battery industry.

It should be noted that all suppliers still apply an energy surcharge ranging from €235/tonne to €385/tonne to take into account the increased energy costs. This surcharge, however, is not decreasing.

Filame reminds us that the price of the alloy surcharge is set month by month by the various suppliers according to the qualities of stainless steel they offer.  There are therefore differences between the various suppliers but the trend is noticeable for all of them.

Furthermore, the price is set on the day the material is delivered. There may therefore be differences between the time of ordering and the time of delivery, especially as delivery times have not decreased.

It should also be noted that the figures below are a general trend among steel manufacturers and that the price among slitters, wire drawers or wholesalers varies according to the quality requested, the nature of the product (sheet, coil, wire), the quantities requested, the thickness or diameter of the wire and the packaging.

Filame also draws the attention of its clients to the fact that, if necessary, it will have to adapt its prices in relation to the time of the order, depending on changes in the price of materials and the time of delivery.

As the Filame Group does every month, we have consulted our panel of suppliers to provide the most accurate estimate possible of the evolution of the price of the alloy surcharges for the stainless steel grades that the Filame Group uses on a regular basis.

For the month of June, after the surge in May, a drop in prices was noted for the first time in June.

It is too early to say whether this reflects a lasting downward trend in the markets, but the trend follows the one observed for steel prices.

It should be noted that all suppliers still apply an energy surcharge that varies from 235€/tonne to 385€/tonne to integrate the increase in energy costs.

Filame reminds that the price of the alloy surcharge is fixed month by month by the different suppliers according to the qualities of stainless steel they offer.  There are therefore differences between the various suppliers, but the trend is noticeable for all concerned.

Furthermore, the price is defined on the day the material is delivered. There can therefore be differences between the time of the order and the time of delivery, especially since delivery times are still quite long, even if they are stabilizing.

It should also be noted that the figures below are a general trend among steel manufacturers and that the price among slitters, wire drawers or wholesalers varies according to the quality requested, the nature of the product (sheet, coil, wire), the quantities requested, the thickness or diameter of the wire and the packaging.

Filame also draws the attention of its customers to the fact that it still may have to adapt its prices, if necessary, according to the evolution of the price of materials between the time of the order and the time of the delivery.

While steel prices rose until March, they stabilised in April and fell slightly in May.

Is this the beginning of a longer-term general trend? It is still too early to say.

The various steel suppliers on Filame’s panel have reported a drop in orders for these products over the last four weeks.

They explain this on the one hand by a car market that is clearly down, notably due to the shortage of components.  Other factors such as the war in Ukraine and the prolonged lockdown in China which has brought many companies to a standstill are also cited as having some influence.  All this has led to a drop in demand which has had a downward influence on prices.

Thus, while hot rolled coils were trading between €1330 and €1450/tonne in March and April, prices in April were more in the region of €1200/tonne. For cold rolled coils the price is just below 1300 €/tonne.  Wire follows the same trend.  Of course, one has to pay attention to the qualities and quantities desired, which also have an influence on the price level.

It is not possible to say for the moment whether stainless steel prices will follow the same direction.  Indeed, while the steel component may decrease, the alloy surcharge, which currently represents about 60% of the price, had risen sharply again in May.  Stainless steel prices are therefore much more linked to the evolution of Nickel and Chromium prices for which demand remains very strong.