EU Steel Prices Steady
in May Despite Anxiety in Global Market
The European steel market continues to be
affected by rising uncertainty. Trade with non-EU countries is
considered a risk because of the possibility of sanctions being
applied for material already contracted. Moreover, steel buyers,
where possible, are postponing their purchasing decisions while they
consider the potential outcome of the USA’s Section 232 legislation
and the EC safeguard investigation. Consequently, as buying activity
slowed, prices either stabilised or, particularly in the south of
Europe, registered modest downward movements, in May. Underlying
demand remains healthy, supported by favourable economic conditions.
The German manufacturing sector made a robust start to the second
quarter, with output rising substantially. Mill order intake is
healthy as end-users are, finally, forced into placing orders.
However, in the distribution sector, sales activity slowed, in May.
Recent strip mill business was negotiated at figures similar to last
month’s values. Service centres are cutting their resale prices,
often quite significantly, in order to try to stimulate sales.
Import offers are not competitive.
French basis values were generally unchanged, in May. Buyers expect
this stability to continue, despite the steelmakers’ attempts to
obtain further rises. A number of distributors are satisfied with
sales volumes, but others report a noticeable slowdown. Nonetheless,
demand from the construction and auto industries remains healthy.
The high number of public holidays and extended weekends, in the
month of May, reduced the amount of business but activity is
expected to recover, in June. Meanwhile, planned industrial unrest,
resulting in strike action through to June, plus a shortage of
available transport, is complicating delivery logistics.
The recent slowdown in growth in the Italian manufacturing sector
continued during April. Steel buyers successfully negotiated
discounts from the producers, during May settlements. This was,
partly, a reaction to reduced import pricing. However, overseas
offers are now becoming more expensive due to changes in the euro/US
dollar exchange rate. Downstream customers are less busy and service
centres have enough stock to allow them to postpone purchasing
At the start of the second quarter, UK manufacturing output
continued to grow, albeit at a reduced rate. Distributors report
that sales activity is slowly picking up. However, they still
struggle to pass on mill increases, to their customers. A number of
stockists note slightly improved resale prices, as cheaper
inventories are now diminished. Both the auto and construction
industries are underperforming. Basis values quoted by steelmakers,
for third quarter delivery, are slightly lower than those reported
No major price changes were noted in the Belgian market, in May.
Service centres state that producers are unwilling to offer
reductions prior to the summer holidays. Distributors only place
orders for what they need each month. In the majority of cases, they
can now incorporate the mill increases in their resale values to
end-users. Deliveries from the domestic steelmakers are running
late. Import pressure is lacking. Deals appear to be on hold as
buyers await the outcome of the Section 232 measures.
The rate of expansion in manufacturing output increased in Spain, in
April. Currently, the steel market is rather quiet, despite good
underlying consumption. Expectations for lower prices, in the near
future, have led to a ‘wait and see’ attitude amongst customers.
Service centre inventories, although modest, are at a sufficient
level to enable buyers to postpone placing new orders for large
quantities. Quotations from overseas suppliers, with the exception
of those for cold rolled coil, are unattractive. Domestic price
corrections were noted for all strip mill categories, this month.
Distributors failed to fully recoup recent mill hikes from their
Source: MEPS -
European Steel Review
- May 2018 Issue
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