EU Steel Prices Slip as
During June, the European steel market
continued to be affected by rising global trade uncertainty. Steel
buyers, particularly at the distributors, were, where possible,
postponing their purchasing decisions. Moreover, political upheaval,
in parts of the region, led to a lack of investment. As buying
activity slowed, prices, for strip mill products, registered modest
downward movements, in June. Meanwhile, contract negotiations with
OEMs, for the second half of 2018, are ongoing, with producers
looking for small price increases. Healthy underlying demand
supports the proposed hikes, although a softening in raw material
costs does not.
In May, a further slowdown in the pace of German manufacturing
growth was recorded. Availability of standard grade strip mill
products is good. Steelmakers are well booked into the third
quarter. However, a number of buyers note that restrictions on the
purchase of additional quantities have abated. Third country imports
are rarely competitive. Producers are demanding increased prices,
from contract customers, for the second half of 2018. The initiative
has met with a degree of resistance. Meanwhile, recent spot market
business was negotiated at slightly lower figures than a month ago.
Service centres continue to cut their resale values in order to try
to stimulate sales and reduce stock levels.
French demand for strip mill products continues to be supported by
the auto industry. Mills in northern Europe are reporting full order
books, with delivery lead times at fourteen weeks, in some
instances. Basis values continued to decrease a little, in June.
Activity slowed, in May, and the expected pickup has not yet
materialised. However, according to distributors, sales volumes
remain acceptable, although inventories are relatively high.
Moreover, ongoing strikes are adversely affecting transportation.
Italy’s manufacturing sector continued to expand, in May, albeit at
a slower rate than earlier in the year. Spot market prices are under
negative pressure as a result of political upheaval, market
uncertainty regarding the US Section 232 disruption and reduced
purchasing by distributors. Further price falls cannot be ruled out.
Underlying consumption is reasonable. However, customers believe
that the downward price trend will continue, as a result of weak
order intake at the mills.
UK distributors report that sales activity is slowly recovering.
However, their resale margins are still unsatisfactory. Independent
service centres complain that mill-owned distributors are selling
aggressively, thus lowering customers’ price expectations. Both the
auto and construction industries continue to underperform. Basis
values quoted by steelmakers are similar to those reported, in May.
Small negative price changes were noted, in the Belgian market, in
June. The economy is slowing, with growth forecasts revised
downwards. Buyers are slow to make purchasing decisions. In general,
distributors’ resale prices reflect replacement costs but margins
are below recent norms. Service centre stocks are relatively low.
Domestic mill quantities are limited. Import pressure is lacking.
Overseas deals were on hold, in early June, as buyers awaited the
outcome of the Section 232 measures.
Spanish manufacturing output growth eased downwards, in May. The
steel market remains quiet, despite healthy underlying consumption.
Expectations of lower prices, in the near future, led to a ‘wait and
see’ attitude amongst buyers, especially at the service centres.
Distributors reported reasonable sales, in May, but complain that
June order books are shortening. Although current import offers are
not particularly attractive, overseas material, booked earlier in
the year, is now arriving, resulting in high inventories. Domestic
price corrections were noted, for all strip mill product categories,
Source: MEPS -
European Steel Review
- June 2018 Issue
Also See: MEPS
All Products Composite Purchasing Price & Index
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