The price of steel has dropped US$120-$130 per ton in Europe (North European HRC) since March and now sits at around $730-$770 per ton, according to financial analysts.

Writing in an investor’s note dated Aug. 30, Deutsche Bank explained its view that the medium-term market has stabilized: “We expect current prices to remain more or less stable in the second half of 2011 and for full year 2012.”

Referring to the effect this news has on the automotive industry, the analysts continued: “There is approximately 900 kilograms of steel per car. And a 15% steel price increase in the second half 2010/first quarter 2011 explains the bulk of the raw material headwind OEMs are facing this year.”

However, due to the recent stabilization of prices, there could be good news on the horizon: “If our steel price estimates are right (stability for the next 18 months), this could be a tailwind of 50-70 euros per car in 2012,” Deutsche Bank concluded. (Tyres & Accessories)