New Year Fails to Lift
European Steel Prices
European strip mill product prices declined
for the fourth successive month, in January 2019. Market conditions
are weak across the region. Buyers are reluctant to make purchasing
decisions, amidst rising political uncertainty and a lack of clarity
regarding the EC safeguard quota system. Softening demand in a
number of countries, particularly from the automotive sector, is
also a factor. Moreover, inventories, especially at the service
centres, are sufficient for current requirements – allowing
companies to adopt a ‘wait and see’ attitude. Consequently, sales
volumes, in January, were small. The talk of price increases
subsided. The traditional restocking, around the turn of the year,
has been delayed. Competitively priced imports are still available,
either as new orders or, ex-stock, from the ports. Turkey is the
most aggressive non-EU supplying country, currently, but Indian
mills are also prepared to lower their offers.
In Germany, Brexit and the USA’s trade
policies are creating uncertainty. Investments are being postponed.
Strip mill product prices continued to slide, in January. European
steelmakers, with plenty of capacity to fill because of a lack of
demand from the automakers, discounted basis values. Service centres
reduced their inventories at the end of 2018. A number of them are
now restocking. The year started quietly, with less activity than in
the previous January. Buyers are wary and only order for their
immediate requirements, in anticipation of further price reductions.
Offers, from overseas suppliers, continue to be low cost.
With demand prospects, for 2019, below those
of last year, French strip mill product buyers remain cautious.
Nonetheless, activity, in January, was expected to be in line with
that which was experienced during the last months of 2018. The
slowdown in the auto industry continues to be of concern to market
participants. Demand in January remains strong because customers
need to refill inventories, but activity levels in February may
prove to be more problematic.
Political difficulties and a subsequent lack
of investment decisions continue to negatively affect the Italian
economy. Steel selling figures were still under downward pressure,
in the latter part of December, but some buyers report price
stabilisation in early/mid January. Nevertheless, sentiment remains
poor. Only modest improvements are anticipated, for demand and
prices. Inventory levels are slightly reduced. This may lead to a
degree of stock replenishment.
UK service centres reported an acceptable
level of sales at the start of 2019. However, the country’s
impending exit from the EU continues to cause great concern in
business circles. Companies tried to run down their inventories, in
December, with little sign of any restocking, so far, in January.
Resale values are well below the level required by most
distributors. Several companies continue to sell material very
cheaply, in order to generate cash. Ex-mill basis values show signs
Belgian business activity is quiet, with
further downward pressure on strip mill product prices. Buyers adopt
a ‘wait and see’ position as uncertainty persists. Many annual
contracts, between OEMs and mills, have yet to be settled. In the
general market, the steelmakers are willing to make price
concessions, in order to secure business. Competition between
distributors is fierce.
The Spanish manufacturing sector continued to
expand during December 2018, albeit at a slower rate than in
previous months. Steel market participants are concerned about the
current situation, notably, the state of European economies, Brexit
and escalating trade tensions worldwide. Steel buyers held off
purchasing, as a consequence. Local steelmakers continued to adjust
basis values downwards, for February/March deliveries. The move was
driven by the continuing decline in import prices. Service centres
report muted demand with negative pressure on resale figures.
Source: MEPS -
European Steel Review
- January 2019 Issue
Also See: MEPS
All Products Composite Purchasing Price & Index
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