EU FLAT PRODUCT STEEL PRICES NEAR PEAK - MEPS
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
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
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.
Source: MEPS -
European Steel Review
- June 2016 Issue
MEPS - EU Steel
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