EC steel prices and imports: impact of imports from Eastern Europe
| Date | 01 October 1999 |
| Published date | 01 October 1999 |
| DOI | https://doi.org/10.1108/10610429910296046 |
| Pages | 443-454 |
| Author | P.K. Richardson |
| Subject Matter | Marketing |
EC steel prices and imports:
impact of imports from Eastern
Europe
P.K. Richardson
Fellow in Economics and Director of the India Research and
Development Unit, Manchester Business School, University of
Manchester, Manchester, UK
Keywords Pricing, Import, Steel industry, Regression analysis, Eastern Europe
Abstract As might be expected, steel product prices fell during the recession of the early
1990s. Between 1990 and 1992, steel prices fell by about a third. As the economies of the
EC recovered from the recession from early 1993, steel prices rose but by mid-year it was
clear that the increase was much below what was expected. It soon became clear that
expected price rises were being mitigated by rising imports from Eastern European
countries. This paper considers the process of steel price determination in the EC and the
effect of cheap imports on EC prices. It shows that unregulated and relatively cheaper
imports from the Former Soviet Union and Central and Eastern European countries
indeed had a more depressing effect on EC prices by raising supply than would have been
the case otherwise.
Introduction
In early 1993, the steel lobby in the European Community (EC) protested
strongly against, as was alleged, a rising tide of steel imports from the
Former Soviet Union (FSU) and Central and Eastern European Countries
(CEEC). The argument was that unrestricted and unregulated access to
imports from these regions was depressing prices in the EC market, thereby
causing injury to the long-term survival of the EC industry. So serious was
this view that some industry participants went to the extent of calling on the
European Commission (the Commission) to ban such imports outright.
While not out of sympathy with EC producers, the Commission found it
difficult to invoke a heavy hand, as it was party to the plan to assist those
countries to move from planned to market economies.
This paper has resulted from an investigation into steel imports from the
FSU/CEEC and their impact on EC prices from late 1992 to early 1994. This
period marked the recovery of most European economies from the recession
of the early 1990s and the strengthening of steel demand, which tended to
suck in cheaper imports, especially from EC's backyard. It is part of a wider
analysis of the structure and performance of the industry in the Community,
Eastern Europe and the Former Soviet Union and the impact of imports from
that region on the EC market.
After a short discussion on the methodology for the study, the next section
analyses the pattern of steel supply and prices in the EC. Following on from
that, the paper throws some light on the economics of steel supply and
demand and identifies and discusses the main factors that influence pricing
behaviour generally, and in the EC market in particular. While the twin
forces of demand and supply are the main factors that determine steel prices,
other factors peculiar to the steel industry are important. The main issue of
the paper, the influence of imports in general, and those from the FSU/CEEC
The current issue and full text archive of this journal is available at
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A rising tide of steel
importers
Pattern of steel supply and
prices
JOURNAL OF PRODUCT & BRAND MANAGEMENT, VOL. 8 NO. 5 1999, pp. 443-454, #MCB UNIVERSITY PRESS, 1061-0421 443
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