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Home > MEPS Steel News - 19.02.2015


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 suppliers.

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.

MEPS - European Steel Review - February Issue

Also See: MEPS - EU Steel Prices Online



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