European inflation "explosion", steel rose by 250 %, what is going on?

 Affected by repeated global epidemics, geopolitical conflicts, and supply chain imbalances, recently, Eurostat estimated:

In February, the euro zone PPI soared 31.4% year-on-year, compared with the expected 31.6%; the EU PPI soared 31.1% year-on-year.

Soaring PPI, who is the driving force?

The full name of PPI: Producer Price Index is an index that measures the trend and degree of change in the ex-factory price of industrial products. It is an important economic indicator that reflects the price changes in the production field in a certain period.
According to statistics, the main driver of the soaring PPI in Europe is actually the rising prices of energy commodities.

For example, in the euro area's February PPI, the light energy sector increased by 87.2% year-on-year, and the industry-wide commodity price excluding energy increased by 12.2% year-on-year.

In the EU's February PPI, the energy sector rose by 83.6% year-on-year, and industry-wide commodity prices excluding energy also rose by 12.5% ​​year-on-year.

The relationship between PPI and CPI

As we all know, CPI measures the price trend of goods and services closely related to the field of life, while PPI reflects the change trend of ex-factory prices of all industrial products;

To put it simply, CPI belongs to the consumer side, and PPI belongs to the production side.

Once the PPI rises sharply, this indicates a precursor to the upward trend in the CPI. Because the fluctuation of PPI will be transmitted to the CPI of the consumer side.

European inflation "blows up the table"
Due to the over-reliance on energy commodities such as natural gas and oil, Europe has been hit by multiple supplies of oil, natural gas and food since the onset of geopolitical conflicts.

Although Europe and the United States have recently introduced many stimulus policies in response to these pressures, for example, Europe has joined the United States to speed up the oil storage plan; Europe has switched to importing liquefied natural gas from the United States to solve the shortage of natural gas supply…

Unexpectedly, since the beginning of the geopolitical conflict, the pressure on Europe has been one after another. At present, the oil dumping and storage plan has not been fully implemented, and the iron and steel crisis has followed one after another.

European steel crisis
As we all know, steel is not only necessary for life, but also necessary for national development. From small washing machines and cars to large railways and skyscrapers, all of them are products of steel. For example, the proportion of steel in an ordinary car is 60% of its total weight.

Steel has a large demand in many fields, but recently, steel prices across Europe have begun to soar, and the cost of steel has risen from 400 euros per ton at the beginning of 2019 to 1,250 euros per ton now.

The cost of rebar in Europe has risen to €1,140/t last week, a 150% increase compared to the end of 2019.

And the price of hot-rolled coil is almost 250% higher than it was before the pandemic. The price of a ton hit an all-time high!

From:http://dinsteelpipe.com/news/European-inflation-explosion-steel-rose-by-250-percent-what-is-going-on.html