European Steel Prices Slump as Factories Face Slowing Economy

European steel prices are plunging as weakening manufacturing demand combines with inventories that were replenished following Russia’s invasion of Ukraine.

Hot-rolled coil -- the benchmark flat steel product -- has dropped by almost a third since reaching a record in March. Prices are now trading below 1,000 euros ($1,042) a ton for the first time since February, according to Kallanish Commodities.

The decline comes as Europe’s economy slows, with high commodity prices and surging inflation denting consumption in the bloc. Service centers and factories have also rebuilt stockpiles after the war sparked concern about a disruption to steel exports from Russia and Ukraine, reducing the need for consumers to buy products at what remain historically high prices.

“We have been through the supply side panic from the war, and found ways to get supply,” said Matthew Watkins, principle analyst at consultancy CRU Group. “Meanwhile inventories have filled up and demand is slowing.”

The drop in prices could depress the profits of the bloc’s steelmakers, which have reaped a windfall from the commodities boom that followed the pandemic.