EU STEEL PRICES CONTINUE TO SLIDE IN NOVEMBER
The downward trend in EU flat
product selling values persists. The poor economic outlook in many
parts of the world, combined with global overcapacity, has led many
international suppliers to focus on the West European steel market.
Meanwhile, the traditional destocking period, before the end of the
year, has resulted in a seasonal slowdown in demand. The
differential between offers from producers in the north and south of
the region continues at an unsustainable level.
German mills have reduced prices in an attempt to improve their
unsatisfactory plant utilisation rates. Demand has slowed a little
in the second half of the year, leaving distributors with surplus
stock, which will negatively affect their balance sheets.
Consequently, service centres are trying to adjust their inventory
levels. This has led to reduced quantities being placed with the
mills. Ordering may take place at the end of 2015, to provide them
with the material to operate in early 2016.
In the French market, prices have continued to fall significantly,
since our last report. They are still under threat from imported
steel. Stockholders describe the general level of end-users’
activity, in terms of volume, as “fairly satisfactory”. Negotiations
with the auto industry for first half 2016 contracts will start at
the beginning of December, with the mills under pressure to make
reductions. If they concede, it will prove difficult for them to
raise first quarter prices for the rest of industry.
In Italy, domestic producer, Ilva, has been price-matching third
country import offers, in November. Huge volumes of Chinese
material, ordered earlier in the year, are sitting at the ports.
Overall, underlying demand is quite stable. Service centres want to
destock for the end of the year, even though they are already
placing some orders for delivery in 2016. Resale values are very low
as end-users constantly push for concessions.
UK basis values have been put under pressure by third country
importers and mainland European suppliers, taking advantage of the
strong pound. Distributors report that demand, although quieter than
in the summer, has still been reasonably healthy. Their profit
margins remain good. There is more intertrading than normal between
service centres because their stocks are low, as are traders’
inventories at the docks.
Belgian selling values were under pressure, in November. Many cheap
offers from China have influenced market values, despite few orders
being concluded. Buyers have been purchasing from Russian sources at
competitive levels. Large quantities of material have been arriving
from southern Europe, especially from Spain, with very short
delivery lead times – one week only, in some instances.
In Spain, sales have improved a little but competition from ever
decreasing Chinese prices is hitting both the mills and service
centres. Delivery lead times are short, enabling customers to work
with lower stocks.
Source: MEPS -
European Steel Review
- November 2015 Issue
MEPS - EU Steel
up for free MEPS steel news alerts