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The rally in European steel prices to dizzying levels may be finally ending, Bloomberg reported.
Falling iron ore prices, a seasonal slowdown in demand, and the automotive sector, hit by a shortage of semiconductors, are driving down the continent's benchmark steel prices.
Hot rolled coil futures prices gradually declined in August after six months of gains, bringing European producers one of the biggest gains in recent years.
Of course, European manufacturers and construction companies shouldn't be too happy about rapid cost savings.
“If activity picks up in September, prices will remain stable,” said Christian Georges, senior analyst at Societe Generale SA. "The demand for the automotive industry is constant uncertainty due to a shortage of semiconductors, but order books are strong."
According to the industry association Eurofer, automakers account for about 16% of steel consumption in Europe. The sector suffers from a shortage of semiconductors, which has forced the company from Toyota Motor Corp. before Volkswagen AG cut or suspend production in recent weeks.
“Vehicle sales in major European markets are struggling to recover to pre-pandemic levels, which are starting to take their toll on steel orders,” said Grant Sporre, commodities and metals analyst at Bloomberg Intelligence.
