EU Steel Demand Slows in
November - Prices Under Negative Pressure
European strip mill product prices were
revised downwards, in November. Cheap offers from Turkish suppliers
are undermining market confidence. Overall, sentiment is weakening.
Buyers fear that the global economy is slowing down. European demand
is quiet, partly for seasonal reasons, as many companies require
year-end stocks to be as low as possible. In addition, the new
automotive testing procedures have significantly reduced fourth
quarter steel demand from that sector, albeit, probably,
Existing inventories, particularly at the service centres, are
sufficient, for now, due to the arrival of overseas material,
ordered earlier in the year. This allows buyers to postpone
purchasing decisions until the future pricing trend becomes clear.
Consequently, European mill order intake has declined, considerably.
Domestic delivery lead times are no longer extended. Indeed, a
number of buyers report material being delivered earlier than
Order placement slowed, in Germany, in November, particularly for
auto-related applications. Buyers are reluctant to procure material
for stock purposes, owing to year-end financial considerations.
End-users are asking distributors for discounts. Inventories at the
service centres are plentiful, enabling buyers to adopt a ‘wait and
see’ attitude. Import offers are more competitive than in recent
months. Domestic strip mill product prices suffered further negative
adjustments, in November.
Currently, activity on the French strip mill products market is
slow, with basis values weakening, as a result. Meanwhile, EU
suppliers continue to pursue price rises, as negotiations for annual
and half-year contracts, with the car industry, are underway.
Automotive demand, for 2019, is expected to pick up at the beginning
of next year. In the general market, selling figures declined
further, in November.
A sharp reduction in new orders led to a further fall in Italian
manufacturing output, in October. Economic concerns, plus the
government’s confrontation with the European Commission, resulted in
sluggish steel demand and downward price pressure on strip mill
products. Inventories at the service centres are high, as end-users
purchase only small quantities. Resale margins are poor. Imports are
competitive, as Turkish, Indian, Chinese and South Korean suppliers
return to the market. Should their offers become more attractive,
orders may be placed for 2019 arrival. At the moment, most companies
are trying to destock before the year-end.
Activity in the UK’s manufacturing sector fell, in October. The
country’s impending EU exit is causing growing uncertainty in
business circles. Subdued consumption, by the vehicle manufacturers,
is problematic for steel suppliers. Strip mill product basis numbers
softened further, due to poor demand and pressure to match import
offers, particularly from Turkish sources.
Belgian market values weakened further, in mid/late October. Since
then, stabilisation was noted. Buyers believe that increases are
unlikely before the end of the year, as the economy slows. Some
mills still have availability for orders to be produced in the final
quarter. Consumer demand is subdued. Many distributors are only
purchasing replacement material, as they postpone buying decisions
as they wait to see how prices will evolve. Much will depend on
third country imports and pressure from southern Europe.
Spanish manufacturing continued to expand, during October. In the
steel market, EU producers adjusted prices downwards, for January
2019 deliveries. The move was driven by the continuing decline of
import prices, for shipments into the beginning of next year. The
market is quiet, as buyers monitor new developments. Many are slow
to purchase as they have sufficient material, either in stock, or
already on order.
Source: MEPS -
European Steel Review
- October 2018 Issue
Also See: MEPS
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