Europe’s Steel Rally May Be Peaking While the U.S. Powers On

The rally in European steel prices to eye-watering levels may finally be running out of steam.

A dip in iron ore prices, cheaper imports and a seasonal slowdown in demand are conspiring to cool benchmark prices of steel on the continent. The price of hot rolled coil futures has tapered off gradually in August after six consecutive months of gains, which gave Europe’s steelmakers some of their biggest profits in years.

Across the Atlantic, the rally continues. Hot rolled coil futures are approaching $2,000 a ton, aided by tariffs on foreign imports that President Joe Biden has been in no rush to lift. If he did, it could energize European prices, while cooling those paid by American consumers.

To be sure, European manufacturers and construction firms shouldn’t get too excited about a rapid reduction in costs. The lull in demand is seasonal, and it could pick up again next month.

“If activity heats up in September then prices should remain firm,” said Christian Georges, senior analyst at Societe Generale SA. “Automotive demand is an on-going uncertainty with the semiconductor shortage but order books are strong.”