FALLING RAW MATERIAL COSTS PUSH EU STEEL PRICES LOWER IN NOVEMBER –
MEPS INTERNATIONAL LTD
European flat products basis
prices remain under negative pressure due to domestic oversupply,
weakening raw material costs and flat demand caused by poor
macro-economic conditions in several countries. Third country
imports are, generally, unattractive as local offers are at similar
prices, with shorter delivery lead times. However, there is a threat
from Chinese steelmakers in the EU mills’ traditional export
markets. Domestic producers would like to hold European basis
figures steady as contract negotiations with large end-users, for
the first half of 2015, are due to commence in the coming weeks.
Basis values are largely unchanged in Germany. There is very little
third country import competition because the US dollar is strong.
Moreover, there are few offers from Italy at present. Despite
domestic steelmaker ThyssenKrupp’s production problems, there is no
obvious supply tightness. Mill order intake has shrunk from
non-automotive industries. Little economic growth is envisaged in
2015. Service centre inventories are sufficient at present, with
some companies trying to destock between now and the end of the
year, putting further negative influence on mill order books.
The French market has deteriorated. Demand has slowed down, compared
with last month. As a result, some basis values have slipped. On the
distribution side, resale prices have fallen more significantly.
Service centres, integrated with steel mills, are, reportedly,
quoting very low offers. Imports remain limited due to the weakness
of the euro. However, production inside Europe is plentiful enough
to disrupt the market.
Italian steel consumption is static at a low level, with very little
sales activity. Most end-user sectors remain weak. The small
improvement noted in the first half of the year has evaporated as
demand decelerated in the second quarter. Some contraction is
anticipated in the final trimester. Market sentiment is poor and any
optimism has completely disappeared. Producers continue to offer
UK distributors report healthy levels of business, although a number
of independent companies complain that Tata Steel’s stockholding
outlets are selling quite aggressively as they try to regain market
share. Service centre stocks are generally well controlled. Ex-mill
basis values are stable at the level reported a month ago.
The Belgian market is quiet. Over the last two weeks, we have noted
some price erosion, albeit not sizeable. No major changes are
anticipated by buyers because order placement will be slow as
companies destock ahead of their financial year-ends. Both German
and Dutch distributors are selling across the border at low prices.
Spanish market players are less optimistic than a month ago. Any
hopes of a price rise for the fourth quarter have been quashed by a
lack of mill order intake. Buyers are in “wait and see” mode as they
watch the effect that lower raw material costs may have on steel
prices. Some producers are already accepting today’s basis figures
for January/February rollings.
European Steel Review
- November Issue
MEPS - EU Steel
up for free MEPS steel news alerts