The expected sharp increase in prices is occurring in the steel market

Something widely expected, long delayed and much discussed in the steel community is happening - steel producers/suppliers are raising prices. The search for the limit of profitability at a time of increased energy prices and raw materials, while maintaining production and sales performance, reached the moment of necessary changes.

One of the influencing factors is iron ore prices, which at the end of 2022 reached the highest level since June 9, 2022. At the end of 2022, the raw material prices increased by 43% compared to just one year ago.

The European Union has tentatively agreed to tighten the emission allowances rules and expand the functioning of this market. This is why the EU has finally signed up to the main point of its Green Deal for Europe, with the aim of making the EU economy carbon neutral by mid-century. Steel mills will have to reduce harmful emissions and this will also have economic impacts.

Some steel producers have partially reduced production, either because of the profitability limit they have begun to hit or because of the beginning recession and a slight decrease in demand (about 5% for sheets). On the other hand, the warehouses of European service centres, which were in most cases overstocked, are starting to be emptied and new materials need to be purchased. Steel producers affected by the factors mentioned above are reacting to this by raising prices and postponing delivery dates due to limited capacities (for some producers there was a reduction of up to 2/3). Prices have increased by 21% already for February orders, suppliers are waiting to get offers for the following period and are talking about further price increases. The delivery date for new orders is currently Q2 2023.

Hana Slováková, ALFUN a.s.

The expected sharp increase in prices is occurring in the steel market

Something widely expected, long delayed and much discussed in the steel community is happening - steel producers/suppliers are raising prices. The search for the limit of profitability at a time of increased energy prices and raw materials, while maintaining production and sales performance, reached the moment of necessary changes.

One of the influencing factors is iron ore prices, which at the end of 2022 reached the highest level since June 9, 2022. At the end of 2022, the raw material prices increased by 43% compared to just one year ago.

The European Union has tentatively agreed to tighten the emission allowances rules and expand the functioning of this market. This is why the EU has finally signed up to the main point of its Green Deal for Europe, with the aim of making the EU economy carbon neutral by mid-century. Steel mills will have to reduce harmful emissions and this will also have economic impacts.

Some steel producers have partially reduced production, either because of the profitability limit they have begun to hit or because of the beginning recession and a slight decrease in demand (about 5% for sheets). On the other hand, the warehouses of European service centres, which were in most cases overstocked, are starting to be emptied and new materials need to be purchased. Steel producers affected by the factors mentioned above are reacting to this by raising prices and postponing delivery dates due to limited capacities (for some producers there was a reduction of up to 2/3). Prices have increased by 21% already for February orders, suppliers are waiting to get offers for the following period and are talking about further price increases. The delivery date for new orders is currently Q2 2023.

Hana Slováková, ALFUN a.s.