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
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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