European Steel Demand Wanes: Coal Prices Drop

Bloomberg reported that a drop in European demand for steel, and a shift in China’s supply contracts from Australia to Mongolia, is set to send the prices of coal to make steel to its lowest in two years, potentially dropping 11 percent to $200 a metric ton in the three months to December 31.

A deepening debt crisis in the eurozone has dragged down demand and prices of commodities, forcing the world’s largest steelmaker ArcelorMittal (MT) to shutter or idle plants in the region. Slowing economic growth in China, the second-biggest importer of metallurgical coal, has increased chances of output cuts at mills and further shrinkage in demand for the fuel.

Tim Cahill, an analyst at J&E Davy Holdings Ltd. in Dublin, commented:

Steel demand in Europe is very weak and consumption has slowed dramatically in recent months. It’ll get worse in the second half as government spending slows and banks stop lending to home buyers. Unless the U.S., Europe, China pump in serious stimulus, global steel demand will remain subdued.

Click here to read the full Bloomberg report.