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Home > MEPS Steel News - 22.04.2013

POOR WEATHER HALTS GROWTH IN EU STEEL DEMAND - MEPS

End-user demand for flat products continues to be slow in Europe and, consequently, distributors are also reluctant to order. The poor economic and political environment is contributing to the general gloom, with major companies in many countries posting losses and some heading for bankruptcy. Competition is extremely intense. For everyone involved in the steel industry - producers, service centres and end-users - 2013 is becoming the year in which they must survive, rather than thrive.

In Germany, the mills have failed to secure the rises they were seeking for second quarter business. In fact, basis figures for all flat products are a little lower than March. Producers, hungry for orders, have had to offer discounts. The market overall is quiet. Service centre stocks are stable but distributors are not confident enough to rebuild them.

Activity remains flat in France. Consumers are making enquiries but not finalising business, while investments are scarce. As a result, service centres are reluctant to order and prices have come under pressure. The decrease in resale values can be twice or three times as much as the fall in mill figures because competition is so fierce.

The uncertain political situation in Italy is making an already difficult period for the steel industry much worse. Distributors, needing to create cash flow, are selling very cheaply, whilst keeping their inventories at minimum levels.

The UK market is quiet, with no real improvement in consumption. Poor sentiment means that stocks are not being fully replenished as buyers order the absolute minimum required. Most of the basis advances secured during March have been rolled over for April. In general, service centres have, by now, streamlined their business to cope with lower demand.

Market participants in Belgium see no reason for optimism in the near term. Activity levels are dull. Weather disruption and uncertainty over eurozone policies are not helping the situation. Despite price rise initiatives, basis numbers are actually falling. There is a lot of competition from Italy and Spain but third country material is of no threat.

Spanish end-user demand is stagnant, particularly in the automotive and construction sectors. Distributors are buying very cautiously and the mills are short of orders. Producers have not implemented the increases they wanted because of oversupply. For the moment, we are seeing price stabilisation but the outlook is uncertain.

Source:
MEPS - European Steel Review

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