PHASE CONTINUES IN EU STEEL MARKET - MEPS
Conditions in the European flat products
market are exceptionally quiet at present, leading to renewed
downward pressure on basis values. As consumption has not improved,
both end-users and distributors are reluctant to place forward
orders of any significant volume. The mills are so short of business
that their determination to lift prices appears to be crumbling.
However third country offers are no longer attractive since the euro
has started to weaken.
The German mills still have free capacity for the second quarter as
order intake is slow. Buyers, who are currently in negotiations for
that period, expect to pay less, once deals are concluded. Service
centres are trying to keep inventories as low as possible because
they have little confidence in the performance of the market, either
in terms of price or consumption.
End-user activity remains subdued in France, with very short order
books and completion times. As a result, steel demand from
distributors is weak. Consumption by the auto sector is down, while
activity in the remainder of industry is stable at a modest level.
The Italian economy is very depressed. The results of the recent
election have produced an uncertain political scenario. Steel market
conditions are described as “tough”, with few buyers. Final demand
is weak and, consequently, distributors are sourcing only limited
quantities as they try to cope not only with a lack of sales
opportunities but also payment issues with their customers.
There is little, or no, import threat in the UK at present because
the exchange rate is favourable for the domestic producers.
Certainly, some, if not all, of the proposed £30 per tonne rise,
announced in early February, has been secured. However, service
centres are keeping inventories at a low level as resale values are
not moving up as quickly as mill figures.
There has been no improvement in Spanish demand. Service centres are
struggling as a result of minimal profit margins. They are fighting
over every available order. End-users say they can virtually put
their business out to tender if they have any to place.
Source: MEPS -
European Steel Review
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