EU STEEL PRICES HOLD UP IN DIFFICULT MARKET CONDITIONS – MEPS
Flat product basis numbers are
generally unchanged in western Europe, although MEPS can detect a
little negative pressure in certain countries. Activity is picking
up, albeit slowly, as the economic climate improves. Some
steelmakers have decent order books. However, their raw material
costs remain low, providing them with limited backing to lift
selling prices. Many third country producers continue to reduce flat
product prices. Buyers, in general, are beginning to show more
interest, although, because of the long delivery lead times
involved, much of this material would be arriving in the holiday
German buyers anticipate flat, or slightly lower, values in the
third trimester. The direction will depend on demand, which,
currently, is slightly better than in 2014. Service centres are busy
supplying the booming auto industry and sales to construction are
also satisfactory. However, distributors’ margins remain low because
of overcapacity in that sector.
In France, market participants remain sceptical about reports of an
economic recovery as they have seen no signs of it, so far. Activity
in the steel market continues to be generally lacklustre, with some
sectors, such as construction and energy, suffering more than
others. For now, steelmakers are unable to raise prices. Third
country import volumes have increased because the Chinese and Indian
suppliers have aligned their prices to local values.
Italian flat product basis numbers are also below those reported
last month, mainly due to import pressure. The number of Chinese
offers, in particular, is growing. Industrial production activity in
the first quarter 2015 was slow to start, although it accelerated a
little in March. The only sector to record any real improvement was
automotive. The recovery in carmaking is now the main driver of
steel consumption in Italy. Ongoing attempts by steelmakers to lift
prices should, at least, produce some stability.
UK service centres report that April business was still at a good
level, although perhaps slightly down on March, in some instances.
Resale margins are reasonable. Ex-mill basis values have stopped
falling. Buyers feel that prices have now reached the bottom and,
subject to exchange rate movements, will be similar in the third
quarter. Traders are no longer pushing Chinese material, which is,
currently, only slightly cheaper than European.
Belgian stockholders have plenty of material. There is a great deal
of competition between them to gain orders. Consequently, their
profit margins are thin. Market players expect the present situation
to persist until September.
In Spain, steel buyers are waiting to see how the European mills
will react to very attractively priced third country quotations.
Decisions will have to be made quite soon if customers are to take
advantage of these cheap offers. Already, some companies have booked
overseas business as the price differential is quite large. However,
domestic producers are reluctant to offer discounts as, at present,
their order books are satisfactory because local consumption is
improving and export sales are reasonably good. The situation is
European Steel Review
- May Issue
MEPS - EU Steel
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