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ArcelorMittal seeks higher prices for strip in Europe - 18 January 2012

ArcelorMittal is seeking a €50/tonne price increase for strip products in Q1 – with an increase of €30/tonne for March deliveries over February, taking hot rolled coil to some €550/t ($705/t) – and has advised customers that it may seek further increases in the second quarter of this year to cover rising costs.

A senior company executive tells Steel Business Briefing that prices have already picked up since the turn of the year. From the Q4 low point of €500/t and below, ArcelorMittal set a target of €520/t for February and says this price is now establishing well.

“There was strong pessimism in Q4,” the executive says, and demand is now picking up partly to replenish depleted stocks. ArcelorMittal has seen a 12% increase in order intake from the auto industry in Q1 compared to Q4 2011. There is also a certain element of speculation, as buyers place orders in the hope of being able to re-sell for a higher price later.

The euro/dollar exchange rate is deterring imports into the EU market, but the weak euro is making steelmakers’ raw material costs more expensive. At the HRC price of €500/t few mills would have been covering their costs, making the low price unsustainable. A €50/t price rise over Q1 is needed to account for more expensive inputs.

ArcelorMittal warned against being over-optimistic for 2012. There will be at best a small increase in European steel demand, the executive said – around 1% on average, with more in Germany and less in southern Europe. This means that there must be no relaxing of production cuts; plants currently idle are likely to remain so for the time being.

For Q2, pricing decisions will depend on the evolution of the exchange rate and how the Chinese export price develops after the Chinese New Year holiday, the executive adds.

 

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