Balli Steel Reports European Steel Markets Cushioned From Price Correction by Weak Euro
Balli Steel reports that European steel markets have been cushioned from the effects of the recent downturn in global steel prices due to the weakening Euro.


LONDON, ENGLAND, June 27, 2010 /24-7PressRelease/ -- Balli Steel, one of the world's largest privately owned independent commodity traders, highlights that European steel markets have been cushioned from the effects of the recent downturn in global steel prices due to the weakening Euro. Balli Steel's research shows that steel prices in US dollars fell by approximately 20% between their peak in mid-April and May 2010. However, the weakening of the Euro against the dollar over the same period meant that the relative decline in steel prices was only 3.3% in the Eurozone.

The weakening of the Euro against the dollar has enabled steel producers in Eurozone markets to continue exporting steel for a longer period of time as well as discouraging domestic consumers from importing steel from elsewhere.

However, Balli Steel pointed out that the real demand for steel across the European market remains sluggish. With government spending both directly and indirectly impacting on steel demand, the widespread budget cuts and austerity measures being taken in countries such as Spain, Italy, Germany, France and the UK has led to a significant reduction in demand.

Nasser Alaghband, CEO of Balli Steel, commented: "The weakening Euro has acted as a lifeline to European steel producers, making them more competitive to importers whilst being able to fight off competition from overseas. This trend may continue for some time, however, with falling demand there is a real need for production to be checked if prices are to be maintained. We have already seen a number of producers idle their mills in recent weeks and we expect this to pick up momentum, especially as the traditional summer holiday season approaches."

Balli Steel believes that European producers will now slow steel production in response to reduced demand and increasing costs. Italian steel producer Ilva has already idled its plate mill until July, whilst its hot strip mill has been suspended indefinitely. In addition, ArcelorMittal has mothballed mills in Belgium and Spain and has also announced plans to idle three European blast furnaces in the third quarter of 2010.

Balli Steel believes that if European mills continue to cut production then steel prices are likely to be maintained at current levels and the market may recover sooner due to the limited stock supplies of steel currently available across Europe. However, a failure to restrict supply could lead to further price falls, possibly as large as the declines seen in the Far Eastern steel markets, with Chinese steel prices falling by over 20%.

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Balli Steel
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