EU STEEL PRICES FALL IN LINE WITH DROP IN INPUT COSTS - TO 58 MONTH
According to MEPS International
Ltd, European demand for flat products remains lacklustre as many
customers try to minimise their inventories before the close of the
financial year. Although the mills are trying to resist calls for
lower basis numbers, in the majority of cases they have failed.
Prices have continued to fall, following the trend in raw materials.
Offers from Asia are not particularly competitive at present but
supply from domestic sources is plentiful.
In Germany, quarterly contracts for period one 2015 have not been
finalised completely. Some business has already been concluded for
January at prices below those published in the November issue of
MEPS European Steel Review. The downward pressure is not from third
country offers but from cheaper raw materials. Demand is stable at
an annual level comparable to 2014. A number of service centres are
selling very cheaply in order to reduce their stocks for their
Activity remains at a subdued level in France. End-users are waiting
until the last minute to order steel, while demand from stockholders
is weak. Mills have short delivery lead times, which allow
distributors to keep inventories low. Activity derived from the auto
sector has been slightly better in 2014 than the previous year but
still remains quite modest. The rest of industry has already agreed
a discount for December deliveries. Some buyers foresee the
possibility of further slight erosion for the first trimester.
Purchases will only be finalised just before the holidays.
There is no good news for sellers in the Italian steel sector, where
basis numbers are constantly slipping. Buyers claim that reductions
in raw material costs are now having a very big influence on steel
prices. Moreover, demand is described as ‘dead’, with December being
considerably quieter than is seasonally normal. Market expectations
are for further price decreases in 2015, so customers are reluctant
to commit to forward orders.
UK service centres are enjoying healthy levels of business, although
growth has now slowed a little, ahead of the vacation. Demand is
still good and their margins are better than a year ago. There is
minimal speculative purchasing and, in general, inventories are in
balance. There are stocks at the ports but most of the material is
Low demand, together with shrinking raw material costs, has led to
declining prices in Belgium. Distributors from the Netherlands and
Germany are selling cheaply across the border, threatening resale
values. Service centres are desperate to empty their stocks before
the financial year finishes at the end of December.
Basis figures continue to tumble in Spain, where real consumption is
stable but buyers are delaying their purchases as they watch the
constant cuts in the steelmakers’ outlay on raw materials. They
anticipate lower steel prices in the future.
European Steel Review
- December Issue
MEPS - EU Steel
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