European steel body European Confederation of Iron and Steel Industries (EUROFER) has announced that it will ask EU competition regulators as soon as possible to investigate if the world's leading iron ore producers' efforts to escalate ore prices are abusive or not.
Press reports say that the institution will ask the EU authorities to investigate the positions of Vale of Brazil as well as Rio Tinto and BHP Billiton of Australia, which on aggregate account for 70 percent of the international iron ore market.
Gordon Moffat, EUROFER Director General, was quoted as saying that EUROFER will call for an investigation before March ends on 'unjustified' price increase demands, which are not anchored by any "fundamentals" and not justified by the European steelmakers.
It is reported that EUROFER aims to ask for a separate investigation for largest producer Vale for abuse of its dominant position and another one for the iron ore market in general.
EUROFER released a statement expressing the European steel industry's outrage at the announcement by the iron ore industry that it will massively increase iron ore prices by 80 to 90 percent compared to actual price levels for fines and by even more for lumps and pellets.
In its statement, EUROFER called on European governments to be aware of the implications for the wider economy if these price increases become a reality. The Confederation also emphasized that these price hikes are coming from companies which even in the worst crisis in the world economy in the last 80 years have shown EBIT margins of up to 50 percent per ton.

Brazil's crude steel production in January this year rose by 66.6 percent year on year and was up 4.38 percent month on month reaching 2.69 million metric tons, according to the Brazil Steel Institute (IABr).
In the given month, the country's rolled steel production amounted to 2.09 million metric tons, increasing by 104.1 percent as compared to January 2009 and up 3.94 percent over the previous month. Flat rolled steel products accounted for 1.29 million metric tons or 62 percent of the total rolled steel output and soared by 152.2 percent year on year but was down 1.53 percent over the previous month, while long product output reached 800,200 metric tons, up 56.2 percent year on year and up 14.26 percent month on month.
Brazil's steel exports in January totaled 676,000 metric tons, representing a 4.81 percent rise compared to December last year and up 54.34 percent year on year. The revenue generated by these exports amounted to US$373 million. Meanwhile, the country's steel imports in January totaled 384,000 metric tons, up 76.15 percent over December 2009 and up 52.38 percent year on year, for a value of US$359.1 million. National apparent consumption of steel products rose to two million metric tons, up 13.5 percent over December 2009 and up 68.7 percent year on year.

The demand for steel in Europe will continue to remain weak in the current year as a result of poor offtake from both auto and construction sectors, Tata Steel Europe, which runs Corus, has said.
"The demand for steel will remain weak in Europe in 2010 and the market is unlikely to return to pre-crisis levels for several years," Kirby Adams, the CEO and Managing Director of Tata Steel Europe, said in Tata Review, an in-house magazine.
The automotive demand is expected to be hit by conclusion of European government's customer incentive schemes, Adams said, adding that there was little prospect of recovery in the construction market, especially in the UK, in the foreseeable future.
"Steel-making overcapacity in Europe could be made worse by the threat of imports from Eastern Europe, Commonwealth of Independent States and China," he said.
The problem of the steel makers across the world is going to be compounded as despite the depressed steel market, the price of raw materials increase.
"And despite the depressed steel market, iron ore and coal demand is likely to exceed supply as the Chinese domestic market continues to suck in raw materials, rising spot prices globally. Any rise in raw material prices will obviously squeeze already thin margins," he said.

The domestic EU-15 economy is not much better. There is no sign of an increase in private capital investment nor of industrial output. Top steelmaker, Arcelor, has forecast growth in industrial production of no more than 1.4 percent this year.
With stocks of steel still overhanging the market, this means apparent consumption is unlikely to show any increase for the foreseeable future. In addition, the strong Euro made the EU a net importer of steel in the first few months of 2005, putting further pressure on the market.
The International Iron and Steel Institute forecasts that Europe, excluding the EU -15, will require 4.7 percent more steel this year than last. This makes the region one of the fastest-growing steel consumers in the world outside Asia.
However, these countries together use only about 26-27 million tonnes per year of finished steel versus 146 million tonnes per year in the EU -15, so even a rapid rate of expansion doesn't mean many more tonnes. Consequently, European mills will have to keep their production rates still more firmly in check if they are to forestall a collapse in prices.

Producers in the Nordic region and others supplying northern Europe have pushed through significant hikes in flat steel prices and are hoping to achieve more, despite scant evidence of any uplift in end-user demand. While there have been some positive signs from customers in mainland Europe, markets in the north are still being held back by the wintry conditions.
The mills point out that scrap prices have escalated, due to a relative scarcity of supply and strong demand from buyers in Asia. There will also be the effect of forthcoming leaps in contract prices for iron ore and coking coal. Furthermore, the producers have been selling at unprofitable figures for a long period during the current economic downturn and they are keen to reverse the situation.
However, these higher prices will not be sustainable without a solid increase in end-user consumption and the steelmakers may regret their recent decisions to relight a number of blast furnaces.
The situation has been more drastic in the long products market, which habitually reacts more directly and more quickly to raw material costs.
Transaction values had increased only moderately by the beginning of March and changes to formal scrap surcharges were minimal. However, as the month progressed, producers were driven by soaring raw material costs to withdraw, briefly, from the market while they formulated significant hikes to their list prices.