MEPS - EU FLAT PRODUCT
STEEL PRICES RISE IN OCTOBER, FURTHER INCREASES FORECAST
According to MEPS, the upward momentum in
average European strip mill product prices, reported in September,
continued in October. ArcelorMittal announced new target prices for
fourth quarter production that are higher than current market
levels. Many buyers anticipate that they may be forced to pay more
when future negotiations take place. Overall consumption is
relatively stable but supply is limited due to a lack of imported
material from third country sources, resulting from a series of
trade defence measures on both hot and cold rolled coil, together
with higher prices demanded by many overseas suppliers. Delivery
lead times from European mills are extending into December/January,
pushing buyers to secure tonnage for the start of 2017, earlier than
German demand is healthy. End-users are positive regarding business
levels in 2017. Strip mill product basis values continued to rise,
as a result of restricted supply and extended delivery lead times.
Although a number of buyers are not convinced that the whole of the
recently proposed hike can be implemented. Service centres are
recouping the mill increases in their resale prices. Their stocks,
especially of cold rolled and galvanised coil, are on the low side.
In France, October market activity was subdued but rising prices
boosted mill order intake. Steelmakers implemented further
increases, with more upward movement expected in the near term, when
negotiations for the first quarter 2017 are concluded. We note much
less imported material on offer. Buyers report that European mill
delivery lead times are now similar to those from overseas
Tight supply forced basis values up in Italy. Traditionally, the
region has been particularly dependent on imports. Local steelmakers
claim to be fully booked for 2016. Overall, industrial production
has slowed but a number of sectors continue to recover, including
automotive, mechanical engineering and tube manufacturing.
Nevertheless, service centres struggle to lift their resale values
in line with mill hikes. Sales are slow, as demand is mediocre.
The recent sharp fall in the pound sterling, against the euro and US
dollar, resulted in significant upward movements in flat product
prices during negotiations for the first quarter 2017, between UK
customers and mainland European suppliers. Distributors reported
better sales in October than in August/September. The majority of
service centres continue to apply the mill increases and,
consequently, margins are reasonably good on most products. Stocks
are low due to supply shortfalls.
Belgian distributors reported improved activity in early October. It
was possible to apply recent mill hikes to first half 2017 supply
contracts. Steelmakers were well booked for December/January
production with prices continuing on an upward trend. Imports are
available from South Korean and Indian suppliers but the prices are
similar to those from European sources.
Ongoing constrained supply led to higher basis numbers in Spain.
Despite announcements from some steelmakers to the contrary, a
number of buyers do not expect to pay more for January shipments.
Distributors complain that their customers are resisting increases.
Demand is stable. Competitively-priced imports are on offer from
several third country sources not affected by current antidumping
measures, typically Turkey, India, Egypt and Brazil. MEPS
understands that a number of deals have been concluded, for arrival
Source: MEPS -
European Steel Review
- October 2016 Issue
MEPS - EU Steel
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