It is too early to determine the impact of Brexit, although UK construction forecasts have rebounded since the June referendum and the government is expected to boost capital spending to support construction. This is according to Ben Cunliffe, Sales Director Sections at British Steel.

UK steel demand increased 1.9% on-year in the third quarter against EU growth of 2.1%. Office construction activity in London recently reached an eight-year high, while UK fabricators report full order books through March 2017, according to Cunliffe.

Addressing concerns over Brexit during Kallanish Europe Steel Markets 2016 in Dusseldorf on Thursday, Cunliffe said: “For us it’s a case more of fear of the unknown than reality. We’re seeing positive signs in construction.” Nevertheless, the UK remains an attractive market for imports, with Spanish-origin product comprising 67%, or over 400,000 tonnes, of UK sections imports in the fiscal year through March 2016, he added. There are no Chinese-origin structural steel imports, though.

British Steel has used increasingly more scrap as feedstock in recent months to replace iron ore because of surging coking coal prices. With many blast furnace-based steelmakers doing the same, that will put upward pressure on scrap prices which are therefore likely to remain firm in the short term, according to Cunliffe.

Although raw materials prices have surged in October and November, sections price increases have been far slower. “The real point is the market is still not on the level it was [... prior to 2016],” Cunliffe opined. In the coming months European steel prices will rebound further on the back of costlier raw materials, while scrap still has room to increase as it is undervalued against pig iron.

“UK demand will remain strong for the next 9-12 months; beyond that much will depend on the resilience of the UK post Brexit,” Cunliffe continued. Public sector and infrastructure spend will be key. The potential acceleration of US infrastructure projects under incoming president Donald Trump could also provide an opportunity for UK steel suppliers.

British Steel is a BF-based steelmaker located in Scunthorpe, with a 2.8 million tonnes/year capacity of special profiles, structural sections, rail and wire rod.