The State of the Steel Market

Steel Market Nearly Halts Amid Extreme Volatility

Source: Portfolio, June 13, 2022, 07:00 AM

The Russia-Ukraine war and the subsequent economic crisis have caused drastic fluctuations in the steel market. What started as a slow-moving sector at the beginning of the year exploded into panic-driven demand, triggering significant price hikes. However, since then, opposite forces have taken over, leading to a near halt in orders and subsequent price drops.

According to Roland Furda, Head of Steel Trading and Manufacturing at Épduferr Nyrt., this exceptionally volatileyear requires strategic purchasing and value-added processing to mitigate risks.

From Panic Buying to Falling Demand

Steel prices have always been volatile, with monthly pricing introduced in 2005, but the past few months have been exceptionally unpredictable.

✔ In March and April 2022, steel prices reached unsustainable levels, putting immense pressure on both the construction and machinery industries.

✔ Many projects were halted, and machinery manufacturers reduced orders, leading to a sharp decline in demandand price drops.

A Surprising Turn in the Market

At the beginning of 2022, the European steel market was moving at a slow pace, with no anticipation of war or major disruptions. However, as soon as the war broke out, panic buying spread across Europe.

✔ Fearing a steel shortage, companies over-purchased, stockpiling several months’ worth of inventory.

✔ This sudden demand surge doubled the price of some products, such as heavy plate steel.

“Demand far exceeded supply, causing certain product prices, like heavy plate steel, to double,” explained Roland Furda in his interview with Portfolio.

Extreme Price Swings

✔ In January 2022, the factory price of heavy plate steel was €920-950 per ton.

✔ By April, the price skyrocketed to €2,200 per ton due to panic-driven demand.

✔ However, by May, the panic subsided, and German machinery and equipment manufacturers reduced their orders, leading to a decreased need for steel products.

The steel market remains highly unstable, with prices fluctuating unpredictably. Companies that adapt through strategic sourcing and value-added processing will have the best chance of navigating the turbulence.

Steel Market Slowdown: Épduferr’s Strategy Amidst Declining Orders

Source: Portfolio, June 13, 2022

Demand Halts as Steel Prices Drop

The initial panic-driven demand at the beginning of the year has now shifted in the opposite direction, according to Roland Furda, Head of Steel Trading and Manufacturing at Épduferr Nyrt.

✔ Companies stocked up early in the year, leading to a standstill in the market.

✔ Prices are continuously dropping:

• Heavy plate steel fell from €2,200 to €1,600 per ton.

• Rebar prices dropped from €1,200-1,300 to below €1,000 per ton.

“Now a reverse panic has started—buyers are holding back because they expect prices to fall even further.”

Why Aren’t Manufacturers Receiving Orders?

✔ Existing stockpiles must be used up before new orders are placed.

✔ Some manufacturers cut prices to sustain production, but this doesn’t create more orders.

✔ The steel industry is energy-intensive, and rising energy costs should theoretically prevent such a drastic price decline.

Épduferr’s Position: Good Timing and Market Adaptation

Despite volatility, Épduferr benefited from well-timed purchases and sales.

✔ Planned 2022 sales targets may be reached by mid-year due to strategic transactions.

✔ However, declining demand means stock levels are increasing, requiring gradual price reductions through July-August.

✔ “What we gain in high prices, we usually have to give back later.”

Future Strategy: Value-Added Services Over Pure Trade

✔ Steel consumption is declining worldwide, affecting order volumes.

✔ China’s economic slowdown is impacting the global market, and in Hungary, major construction projects have either slowed or been canceled.

✔ Homebuilding has also declined, with potential buyers delaying projects due to high material costs.

✔ Épduferr will reduce steel purchases for the next 2-3 months, focusing on selling existing inventory.

To offset the decline in raw material demand, Épduferr is shifting towards steel processing and value-added services:

✔ New processing equipment is being installed to expand services like custom sheet metal processing.

✔ “Instead of pure steel trading, we are now prioritizing processing services to maintain steady orders.”

✔ Trading remains complementary—its main role is securing raw materials at competitive prices for processing.

By focusing on value-added production rather than pure trade, Épduferr aims to navigate the turbulent market and maintain long-term stability.