Steel Business briefing - Tuesday, 09 February 2010

Steel Prices need to rise as producers react to increasing input costs, according to Laurence McDougall, chairman of North East Association of Steel Stockholders (NEAS). If UK stockists are to survive and return to profitability they must not sell below replacement costs, he said to loud applause at the NEASS annual dinner attended by Steel Business Briefing on Friday (5 February).

The current demand is what it is and stockholders need to realise this and restore "sensible margins" in their sales, he continued. Other stockists corroborated this view, suggesting demand remains very weak across many sectors, and will continue to do so, which means "discipline" is vital if cost increases are to be passed on. "Pernicious selling" will only serve to undermine prices and profitability in 2010, on trader said.

The UK market for steel is about 10 million tonnes/year, half imported and half produced domestically, he noted. Stockists handle 50% of the tonnage produced by domestic mills and nearly all the imported tonnage.

NEASS raised 2600 for the charity WaterAid at the dinner in Harrogate.