WEAK MARKET CONDITIONS KEEP MEPS - EU AVERAGE STEEL PRICES STABLE
European flat products
purchasing activity has been slow over the last month. Consumption
in mainland Europe is stagnating. Most fourth quarter deals have now
been concluded at the levels prevailing in the third trimester.
Producers have been unable to implement their proposed increases due
to lacklustre demand and the declining costs of inputs such as
scrap, iron ore and coking coal. On the other hand, the strong US
dollar is keeping third country imports at bay and supply from Italy
German market sentiment is poor at present due to concerns about a
recent drop in industrial production. End-users are cautious. They
are only purchasing for their immediate needs. Competition in the
stockholding sector is tough. Overall, demand is stable but not at a
The French market is quiet with modest demand. Participants are
concerned that the situation is static. End-users still have short
order books and are fighting for the small amount of business
available. Ex-mill flat product prices have generally been stable
over the last month, whilst distributors’ resale values have
deteriorated. However, there is a feeling that steelmakers may try
to lift prices in the first quarter next year. The current euro/US
dollar exchange rate is keeping third country imports at a normal
As the recession in the Italian economy continues to bite, steel
producers are still attempting to impose basis rises. They were,
briefly, successful in late September but, since then, prices have
dropped back to the level reported in our last issue. The initiative
was sparked by a fluctuation in the exchange rate when the euro
weakened against the dollar. This was expected to make imported
material less attractive. However, Chinese prices were unchanged,
despite the currency movements. There is no pressure from Turkish
supply, which is currently too expensive. A lack of demand is
widespread across all consuming sectors. There are fears that prices
may weaken further.
UK service centres report brisk sales in October, with many being
even busier than in the previous month. However, resale values are
being slightly negatively affected by a degree of destocking at some
companies and, reportedly, aggressive selling by Tata’s distribution
outlets. Otherwise, they are fairly steady. Stockholders’ buying
prices remain the same as a month ago. The proposed rise was not
implemented as there was no support from raw material costs.
Inventories remain on the low side because of a lack of confidence
in future price movements.
There have been no real changes in either basis figures or activity
levels in the Belgian market. The economic situation is poor, so
steel demand is slow as many end-users have depleted order books.
Service centres are battling for every sale, even over small
quantities. Their margins are very low. There are few third country
import offers and prices are not attractive.
The Spanish economy is slowly getting back on track with more
government investment promised for 2015. However, any success in
ramping up steel prices was shortlived because of slack demand. It
was thought that a fluctuation in the exchange rate would help
sustain a rise but this was not the case. Basis numbers remain firm.
Third country offers are very close to European figures. A number of
distributors report slightly improved sales volumes but activity is
inconsistent. Many customers are purchasing on a weekly basis.
European Steel Review
- October Issue
MEPS - EU Steel
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