Sharp rise in steel prices

BRITISH STEEL last night announced across-the-board price increases of up to 13 per cent in an attempt to halt spiralling losses caused by the serious weakening in prices in the past two years.

The price of steel plates and sections, used in the offshore and construction industries, will rise by between 4 and 7 per cent from 1 March. Flat-rolled products, used in the car and engineering sectors, will go up by 11-13 per cent from 1 April. If the increases can be made to stick, they will boost British Steel's revenues by about pounds 100m this year.

A spokesman warned that further rises would be necessary later in the year to offset the heavy price reductions in recent months, but he declined to give figures.

While steel output has declined by less than 10 per cent since 1990, prices have fallen by between 20 and 30 per cent, plunging most of Europe's steelmakers into heavy losses. British Steel's first-half losses rose to pounds 51m and it is expected to post a further substantial loss in the second six months.

Last week Ruprecht Vondran, president of the German Steel Association, said that the collapse in prices had contributed to a loss of pounds 200m a month for Europe's steel industry.

British Steel has not raised the price of plates or sections for three years. The latest rises would see plate rise by pounds 12 a tonne, sections by pounds 15 and cold-reduced coil by pounds 25- pounds 30. Whether the increases can be sustained may depend largely on what happens to production throughout Europe this year. MEPS (Europe), the steel industry analysts, said yesterday that EC crude steel production should be cut by at least 4 million tonnes in the first half of this year to improve the balance of supply and create sustainable market prices.

In its latest quarterly forecast the Sheffield-based organisation said that EC crude steel production in 1993 should be trimmed to a maximum of 130 million tonnes if a genuine improvement in prices was to be maintained.

British Steel said the price rise, together with further productivity improvements, would help to offset recent increases in costs.