Balli Steel Reports European Steel Markets Cushioned From Price Correction By Weak Euro
Released on: June 26, 2010, 3:45 am
Balli Steel, one of the world's largest privately owned
independent commodity traders, highlights that European steel markets
have been cushioned from the effects of the recent downturn in global
steel prices due to the weakening Euro. Balli Steel's research shows
that steel prices in US Dollars fell by approximately 20% between their
peak in mid April and May 2010. However, the weakening of the Euro
against the Dollar over the same period meant that the relative decline
in steel prices was only 3.3% in the Eurozone.
The weakening of the Euro against the dollar has enabled steel producers in Eurozone
markets to continue exporting steel for a longer period of time as well as
discouraging domestic consumers from importing steel from elsewhere.
However, Balli Steel pointed out that the real demand for
steel across the European market remains sluggish. With government spending both
directly and indirectly impacting on steel demand, the widespread budget cuts and
austerity measures being taken in countries such as Spain, Italy, Germany, France
and the UK has led to a significant reduction in demand.
Nasser Alaghband, CEO of Balli
Steel commented: "The weakening Euro has acted as a lifeline to European steel
producers, making them more competitive to importers whilst being able to fight off
competition from overseas. This trend may continue for some time, however, with
falling demand there is a real need for production to be checked if prices are to be
maintained. We have already seen a number of producers idle their mills in recent
weeks and we expect this to pick up momentum, especially as the traditional summer
holiday season approaches."
Balli Steel believes that European producers will now slow steel production in response to reduced demand and
increasing costs. Italian steel producer Ilva has already idled its plate mill until
July, whilst its hot strip mill has been suspended indefinitely. In addition,
ArcelorMittal has mothballed mills in Belgium and Spain and has also announced plans
to idle three European blast furnaces in the third quarter of 2010.
Balli Steel believes that if European mills continue to cut production then steel
prices are likely to be maintained
at current levels and the market may recover sooner due to the limited stock
supplies of steel currently available across Europe. However, a failure to restrict
supply could lead to further price falls, possibly as large as the declines seen in
the Far Eastern steel markets, with Chinese steel prices falling by over 20%.
Notes for Editors
About Balli Holdings:
Balli Holdings is a large private, multi-national corporation, headquartered in
London, with offices in Dubai and other key business hubs around the world.
Balli was established in 1982 and operates a number of affiliated companies
specialising in commodity trading, industrial, real estate and private equity with
operations in over 20 countries. Together with its affiliated companies, Balli
employs over 2,000 people worldwide.
Balli Steel is the company's principal operating subsidiary, and is one of the
largest independent commodity traders of steel in the world. Balli
Steel provides raw materials and steel to a number of market segments including
steel mills, steel service centres, pipe and tube makers, the oil and gas industry
and other designated end-user segments such as the packaging products industry.
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