EU STEEL PRICES RECOVER SLIGHTLY IN FEBRUARY FOR MOST PRODUCT FORMS
European flat product suppliers
claim that they have good order books, as the weakened euro gives
them an advantage when selling in US dollar denominated export
markets. This should contribute to an increase in their bargaining
position during negotiations with domestic customers. However,
buyers have remarked that for first quarter business, steelmakers
did not push very hard to implement their proposed €30/40 per tonne
increase. Indeed, we have noted only small changes from the December
price level. It is believed that the mills will try to enforce the
hike when second trimester orders are discussed. Although material
from the Far East is not so attractive at present, the massive
devaluation of the rouble has led to aggressive selling by Russian
In Germany, buyers report that they have placed most of their first
quarter orders at the same price as in the final trimester of 2014.
All that is left to settle is a small amount of spot business.
Customers are not anticipating the successful implementation of a
significant rise in April either. They see no argument to support
the initiative when mills are profitable and raw material costs have
become so much cheaper. There is virtually no interest in third
country offers at present. Service centres are quiet and have no
urgent need to purchase.
Activity remains weak in the French market. Nonetheless, producers
have started to implement a number of small price increases. They
are benefitting from the situation at Ilva Taranto, which has been
declared insolvent. Deliveries of sheets have been blocked – even
material already on board ships. Buyers need to find other suppliers
quickly. As a result, mills have increased their offer prices and
customers are accepting them. In contrast, at the end of January, a
number of large automotive service centres negotiated reduced prices
for the benchmark hot rolled coil in the second quarter.
Italian steelmakers have followed ArcelorMittal’s lead by proposing
small increases. Output from a number of local suppliers has been
curtailed and the euro’s weakness against the US dollar is making
import quotations more expensive. Nevertheless, the market is
extremely quiet. Many customers, who bought in December for delivery
in the first quarter, are now waiting to see how prices will
develop. Final demand remains slow. However, basis values do appear
to have moved up slightly in the marketplace. More time is necessary
to verify if this will be the definitive direction.
UK buyers report that major suppliers offered similar prices to last
month, for March business. Continental mills are not pushing for an
increase because the fall of the euro against the pound sterling has
already given them a price advantage. Most producers have yet to
discuss April selling values but many customers do not envisage a
rise. Distributors enjoyed good January sales and, overall, their
profits are reasonable. However, resale margins have come under a
little pressure since mill prices weakened in January.
Belgian customers concluded the majority of first quarter deals at
the January level. Steelmakers have informed buyers that their goal
for the second trimester is a hike of €10/20 per tonne. Purchasers
are not sure that this is achievable but stocks are low, so
companies will need to buy. Moreover, producers are more successful
in export markets now and imports have become more expensive.
Suppliers continue to try to improve their prices in Spain but
clients report that their efforts are less robust than expected.
Although inventories are not particularly high, many distributors
can afford to wait before ordering more material. Service centre
sales are stable and there is a renewed confidence in the market.
European Steel Review
- February Issue
MEPS - EU Steel
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