PLENTIFUL SUPPLY KEEPS EU STEEL PRICES IN CHECK - MEPS
Trading volumes of flat products
have been slow since MEPS’ April research due to a number of Easter
and Labour Day holidays in Western Europe. Only minor price changes
have been noted. However, overcapacity, negative sentiment and
increasing third country competition persist, enabling buyers to
resist mill efforts to impose increases and, in some instances, to
win small discounts. Nevertheless, macroeconomic forecasts are
optimistic in several countries, encouraging producers to slightly
raise some of their offers.
Strip mill product prices have weakened slightly in Germany, despite
a relatively healthy business climate and improved consumer
confidence. Supply and demand are out of balance. The market is
being targeted by producers in other EU countries, where demand is
less robust. Customers feel that steelmakers’ talk of price rises is
just wishful thinking. Service centres, uncertain of market
developments, continue to keep stocks low. Resale values are poor.
Activity has remained subdued in France, partly due to the Easter
break and two public holiday weekends at the beginning of May.
Producers have stabilised market prices and even raised some of
their offers by €5/10 per tonne but buyers believe the outlook
remains uncertain. End-user demand on distributors is muted and
resale values are dismal.
The Italian market has been particularly quiet because of a large
number of holidays over the last month. Despite several
announcements by steelmakers, who are still officially proposing
increases, basis figures have not picked up. However, generally,
they have stabilised, although the mills are ready to negotiate if
presented with a large, firm order.
UK basis figures appear to have bottomed out. However, the mills’
attempts to instigate a rise were totally unsuccessful. Service
centres report that demand is holding up and that prices do not
reflect the reasonably healthy market. Clearly, there is an issue
regarding the exchange rate which is creating a favourable situation
for overseas suppliers from mainland Europe and further afield.
MEPS has noted very little price movement in Belgium, where activity
levels are flat. Business, overall, is quiet with several end-users
experiencing payment difficulties. Market participants foresee no
change until the autumn. In Spain, steelmakers have stopped
demanding their proposed €20 per tonne hike. There has been some
recovery in demand, albeit only small. Inventories at the
distributors are slightly higher than necessary, so buyers are in no
hurry to purchase more material, especially as the summer holidays
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