Steel price down 15% in 6 months

The price of steel price has dropped US$120-130/tone in Europe (North European HRC) since March and now sites around $730-770/ton level (515 – 540 euros/ton), according too financial analysts. Writing in an investor’s note dated 30 August, Deutsche Bank explained its view of that the market has stabilised in the medium term market: “We expect current prices to remain more or less stable in the second half of 11 and for full year 2012.”

Referring to the effect this news has one the automotive industry, the analysts continued: “There is approx 900 kilograms of steel per car. And a 15 per cent steel price increase in the second half 2010 – first quarter 2011 explains the bulk of the raw material headwind OEMs are facing this year.” However, due to the recent stabilisation of prices, there could be good news on the horizon: “If our steel price estimates are right (stability for the next 18 months), this could be a tailwind of 50 – 70 euros per car in 2012,” Deutsche Bank concluded.

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