Bekaert — Steel Prices & the Wire Products Cycle

Bekaert is the world's largest producer of steel wire transformation and coatings — making the steel strands inside car tyres, the wire mesh in concrete, the fencing on farmland and the steel cord in conveyor belts. As a pure downstream steel processor, Bekaert's margins and volumes are directly linked to both the price of hot-rolled coil steel and the global industrial demand cycle.

Why Steel HRC Drives Bekaert

Bekaert buys hot-rolled coil steel as its primary raw material and transforms it into high-value wire products. When HRC falls below $380/tonne, Bekaert faces two opposing forces: lower input costs (positive) but also weaker industrial demand from customers (negative). At these depressed levels, the demand weakness dominates and the stock de-rates. When HRC recovers above $1,100/tonne, customer demand has also recovered strongly, and Bekaert can widen margins while volumes grow.

Bekaert's significant exposure to emerging markets — particularly Brazil, China and India — amplifies the steel cycle because these economies are more sensitive to commodity price swings than European markets.

The 2014–2019 Steel Cycle: +111% in 56 Months

Steel HRC fell below $380/tonne in December 2014 as Chinese overcapacity flooded global markets. Bekaert fell to around €18.0 per share. The subsequent recovery — driven by Chinese supply-side reform, global infrastructure spending and the closure of high-cost Western capacity — lifted HRC above $1,100/tonne by August 2019. Bekaert reached €38.0 — a gain of 111% in 56 months.

Bekaert's Diversification Advantage

Unlike pure steel mills such as SSAB or ArcelorMittal, Bekaert's high-value transformation steps (drawing, coating, stranding) provide margin buffers that commodity producers lack. The company's move into advanced materials — including fibre-reinforced polymers and engineered surfaces — further reduces pure steel cycle sensitivity over the long term.

Key Risks

Bekaert's main risks are Chinese competition in wire products (particularly in lower-value segments), emerging market currency risk (significant BRL and CNY exposure) and the long-term transition away from steel-cord tyres if alternative materials gain market share. European anti-dumping measures on Chinese wire products provide some protection.

Cycle Performance Summary