Global Long Steel Association: European steelmaking costs rise by more than €110 per tonne

en.Wedoany.com Reported - On November 2, the International Rebar Producers and Exporters Association (IREPAS) released its November short-term outlook for the global long steel market, noting that the sharp rise in European electricity and natural gas prices since August has pushed direct steelmaking and rolling costs up by more than €110 per tonne. Over the past three months, EU natural gas prices have cumulatively risen by about 150%, with Dutch TTF natural gas futures climbing from below €40 per megawatt-hour to above €100. The association believes that rising energy costs are squeezing the profit margins of European steelmakers, with some mills facing the choice of raising selling prices, accepting lower profits, or cutting output.

The association noted that demand for European long steel products remains persistently weak, and domestic producers are still competing for limited orders. After the EU tightened its steel import safeguard quotas and implemented the Carbon Border Adjustment Mechanism, substitute steel supply from imports has been restricted, but these measures have not yet significantly improved product selling prices or profitability for European steel mills.

Recent steel price increases in Europe have been driven mainly by energy and production costs rather than growth in end-user demand. Abnormally low water levels on some European rivers have further raised steel transport and logistics costs. Germany's construction sector is still waiting for government-funded infrastructure projects to enter the actual construction phase, while private investment is being affected by financing and economic uncertainty.

IREPAS expects that if energy prices remain at current high levels or continue to rise, European steel prices may increase further in the first quarter of 2027. If some steel mills reduce output because production costs exceed sales revenue, this will further alter regional market supply levels.

Overall demand in the global long steel market remains sluggish, with fluctuations in scrap prices driving adjustments in rebar prices. The association noted that rising scrap costs have increased purchasing demand from some buyers for Far East billet. China's steel overcapacity and export scale remain the main supply pressures facing the global long steel market, and the market has not yet shown signs of a significant slowdown in Chinese steel exports.

US steel demand has remained broadly stable, but growth is concentrated mainly in AI data centers, energy engineering, and some infrastructure projects, while steel demand from residential and commercial construction remains weak. The association estimates that North American steel capacity utilization is around 80%, and noted that electric arc furnace steelmakers are facing cost pressures from electricity shortages and inadequate transmission infrastructure.

India and some Southeast Asian countries remain relatively stronger markets for global long steel demand. IREPAS expects a moderate improvement in the Southeast Asian market in 2027, but the recovery will vary by region. The association also expects that growth in US domestic scrap consumption and reduced European scrap export supply may further push up international scrap prices.