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Home > MEPS Steel News - 21.06.2016


Although European strip product makers were determined to sustain upward price momentum, in June, it appears to have stalled, for now, according to MEPS. In a number of countries, buyers resisted the mills’ attempts to achieve higher basis values for late third quarter deliveries, despite support from trade defence measures. No domestic demand improvement was noted. Steel and raw material prices continued to tumble in Asia. As global export offers fall, buyers’ interest in purchasing from overseas is returning. However, local delivery lead times continue to be extended and problems at some production sites raise the possibility of supply disruption in the region.

German buyers report that mills are fully loaded at present. Short-term demand cannot always be satisfied, but orders for delivery later in the year are being taken. Service centres buy only for their immediate needs as they expect prices to decline later in the year. Underlying demand is relatively stable. Steelmakers would like to gain further basis increases. For the moment, figures are unchanged from a month ago.

Despite activity in the French market remaining subdued, prices continued to increase, in late May, by around €20 per tonne. It is still difficult for buyers to obtain material, especially coated coils. Delivery lead times from most producers stretch to August. Consequently, new orders will not be delivered until after the long summer vacation.

After escalating significantly in May, on an absence of import alternatives, the positive movement in Italian basis values has largely stalled. Buyers are not sure whether this is just a short interruption of the upward cycle or a signal of forthcoming weakness. Service centres and end-users, who built up stocks over the last few months, are able to wait before re-ordering at the higher values demanded by the mills. Reduced quantities are available from European suppliers because of production problems. However, customers expect Chinese offers to be renewed at competitive rates quite soon.

Further price rises were noted in the UK. Changes to the euro/sterling exchange rate may start to alleviate further increases from continental European sources. A number of customers experienced sourcing difficulties as their mainland European suppliers reduced allocations. The uncertainty surrounding the future of Tata Steel’s UK facilities created caution over forward order placement with that company.

Belgian demand is satisfactory. Prices stabilised in late May/early June at a slightly higher level than previously reported, for material to be delivered in September/October. Service centres bought a little more than usual, to cover longer delivery lead times. Resale values are climbing on a regular basis, alongside mill hikes. Distributors report that more end-users are specifying material of European origin.

The recent rapid price advances in the Spanish market levelled out, in June. Domestic producers accepted orders up to September at the figures quoted in our May report. July/August deliveries were said to be fully booked because of a lack of material from overseas. However, as service centres have rebuilt their inventories they do not need to re-order substantial quantities immediately. Moreover, buyers believe that renewed interest in imports could result in discounts from the European mills, later in the year, now that local selling values have become so high.

MEPS - European Steel Review - June 2016 Issue

Also See: MEPS - EU Steel Prices Online



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