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Home > MEPS Steel News - 26.04.2016


European flat product prices moved up quite rapidly in early April against a background of domestic output curbs and trade defence measures. Moreover, there was a significant lack of attractively-priced imported material from Brazil, India and Iran, as well as from China. This allowed mills in Europe to push through substantial price advances. Buyers, who were at first reluctant to pay more, have accepted the proposed increases as their options become limited. Should overseas suppliers suddenly reverse their strategies and become more competitive, any steel ordered would not arrive at European ports until autumn, at the earliest. Domestic producers, who will continue to push for additional rises for the remainder of the second quarter, foresee further potential for advances in the third trimester.

In Germany, there were very few offers from third country sources, in April. Buyers were dependent on EU suppliers who ramped up basis values. However, customers complain that underlying demand is not as strong as the mills report. It is ticking over at a similar level to 2015. Service centre stocks are quite low. However, distributors are only ordering normal quantities.

Demand picked up in France as prices started to climb. Distributors had been waiting to place orders until they were sure that basis values had stopped falling. As a result, stocks were low. There is now a flurry of purchasing to refill inventories. Meanwhile, end-user activity continues to show a year-on-year improvement.

Italian prices strengthened significantly on a lack of import offers. The upward movement was rapid as, previously, overseas material had exerted a great deal of negative pressure on the market. New imports from China have stopped completely, providing relief for domestic suppliers. Service centres report increased demand from OEMs over the last two months, especially from the carmakers. There is still Chinese stock at the docks, which arrived early in the year. Competitively-priced South Korean material continues to arrive, much of which was ordered directly by the manufacturers. Stockholders are only buying minimum quantities from local mills, as they keep inventories on the low side.

A great deal of uncertainty exists in the UK market because of the events at Tata Steel. Availability is quite tight. Sourcing has become more difficult. Some mainland European mills have been forced to reduce allocations to UK customers. Substantial ex-mill price rises have been reported during recent negotiations. A number of service centres reported healthy levels of business but others have experienced slightly weaker demand. Resale values are moving up steadily as distributors do their utmost to sell at replacement costs.

A dearth of third country import offers helped domestic producers to lift basis values in Belgium. Service centre sales have picked up significantly. Transport costs, which many distributors had not charged in recent times, are, once again being added to their customers’ invoices. Resale prices have moved up rapidly.

Political uncertainty has had a detrimental effect on the Spanish economy. Steel demand is static, or even falling, because of this. However, basis values have shot up due to a shortage of competitively-priced import offers. Domestic deliveries are now into July. However, buyers warn that, should European prices rise much higher, they will consider ordering overseas material, which is now looking more attractive. Distributors continue to keep inventories low. Their profit margins have improved.

MEPS - European Steel Review - April 2016 Issue

Also See: MEPS - EU Steel Prices Online



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