EU Steel Prices Rise
Despite New US Import Tariff Announcement
The recent US announcement of a 25 percent
tariff on steel imports certainly created a great deal of
speculation and uncertainty in the EU market. It dominated
discussions during MEPS research, in March. However, purchasing and
prices were not directly affected by the news.
European strip mill product basis values continue to move up.
Figures are still below the steelmakers’ proposed minimum target
levels but producers appear confident that these will be reached.
The initiative is supported by good order books, extending delivery
lead times and the low availability of imports, as a result of trade
defence measures. Moreover, quotations from third country suppliers
remain largely uncompetitive.
Despite easing, in February, manufacturing output growth remains
high, in Germany. This is reflected in strong steel demand. Recent
strip mill product business was negotiated at figures above those
reported, last month, but not yet at the minimum target levels
proposed by the domestic steelmakers. Order intake at the domestic
mills is positive and delivery lead times continue to lengthen.
Distributors’ stock levels are acceptable when compared with
expected activity levels. Third country imports are available but
buyers consider that prices are too high to be competitive.
In France, activity, in the main steel consuming sectors of
automotive and construction, is good. This, together with a lack of
imports, helped, once again, to push up strip mill product basis
values, in March. Nonetheless, several stockholders report quite
high inventories and, consequently, no immediate need to purchase.
School holidays and adverse weather conditions – floods and snow –
slowed demand in late February and delayed deliveries from a number
of mills. Steelmakers continue to claim further price rises into the
The Italian steel market is quiet, at present, with substantial
speculation surrounding the political situation. First quarter
ordering is finalised. Now, as steelmakers demand high prices for
the second trimester, buyers, especially service centres, are
postponing purchasing decisions as they are loath to pay more.
Distributors are already struggling to pass on recent mill increases
to their customers. Resale values are undermined by the large number
of small, family-owned, stockists who are able to operate on a low
fixed cost model. Underlying demand remains in a state of recovery
but restocking is now complete. Flat product basis figures rose, in
March, although the pace of the increase slowed. Attractive third
country offers are scarce.
UK demand remains subdued. However, a number of distributors
reported a slight improvement in activity over recent weeks.
Inventories are reducing. Nevertheless, they are still too high at
several service centres, creating negative pressure on resale
values, despite higher mill prices. Third country quotations are
limited. Those that do exist continue to be unacceptable to many
buyers. Port stocks are at their lowest for several years.
In Belgium, basis values continue to escalate. Further rises are
anticipated. Domestic delivery lead times are well into the second
quarter, with a number of mills quoting for the third trimester.
Demand is brisk and customers are optimistic regarding future
business levels, as the economy continues to perform well. Offers
from third country sources are hard to locate. Service centres
report that implementing replacement costs into their selling prices
to end-users remains problematic.
The Spanish steel sector is performing well, with good demand.
Distributors of strip mill products are busy. Service centre stocks
are considered to be at the correct level for today’s operations. In
March, buyers settled orders for May delivery at higher prices than
in the previous month. Although distributors’ selling values are
also rising, they are still some way from transferring the recent
mill increase to their customers. Margins remain acceptable only
because inventories still contain cheaper material. As European
basis figures moved up, a number of companies closed deals with
overseas suppliers. However, the volumes involved were quite small.
Source: MEPS -
European Steel Review
- March 2018 Issue
Also See: MEPS
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