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Home > MEPS Steel News - 25.10.2016


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 usual.

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 producers.

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 February 2017.

MEPS - European Steel Review - October 2016 Issue

Also See: MEPS - EU Steel Prices Online



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