This will come as surprise to industry experts who were expecting the first few months of 2005 to see steady market conditions, and also as a relief to the beleaguered packaging industry.
According to MEPS' index of transaction prices in which January 1997=100, March figures have fallen from February levels by between two and four points for individual flat rolled products, and by as much as ten points for long products. This leaves the EU average flat products price at €591 per tonne, down from €602 last month.
The analyst says that customers are holding off from placing fresh orders, and less than the normal volume of agreements for new business have been reported this month. They are living off stocks that have been mounting since the latter part of 2004.
The decline is perhaps surprising. Only last month, MEPS reported that increases in European steel values had made the EU the most expensive market in the world.
The EU average price for cold rolled coil was $US838 per tonne in January, considerably higher than in the other main consuming countries. Prices for hot rolled plate, galvanized sheet and some other products were showing a similar divergence.
It was predicted that the knock-on effect for steel packagers, already battling tight profit margins and threats from innovative new packaging materials, could be severe. Arcelor, the Luxembourg-based steel giant had already raised prices in the first quarter 2005.
However, MEPS now says that suppliers seem to have misjudged the quantity of steel in the market. Real consumption in the EU-15 appears to have gone up by less than 3 per cent last year. Figures from the producers' organisation, Eurofer, show that EU mills increased deliveries into their domestic market by no less than 5.7 per cent in the same period - double the rate of growth in actual consumption.
Imports also expanded quite strongly in the second half of 2004. Estimates suggest they rose by about 15 percent year-on-year and are thought to be remaining high in the first few months of 2005.
The consequence, says MEPS, has been an increase in stocks of in excess of 4 million tonnes. This will take a while to unwind, and while there is no dramatic drop in price levels so far, this could happen given the poor outlook for steel consumption.
Prospects for EU-15 steel demand this year are modest at best, though it could increase significantly in the new member states as well as in neighbouring countries of Eastern Europe, Russia and Turkey. GDP in the Euro area may rise by less than 2 per cent in 2005, and steel-using sectors will grow by an even smaller amount. It is doubtful whether the mills will see any increase at all in their rate of order intake, at least through the first half of 2005.