EU STEEL PRICES SOFTEN
AFTER SPRING RECOVERY
Overall European strip mill product demand
slowed, in July, according to MEPS International Ltd. Many customers
had sufficient stock to see them through the summer. With delivery
lead times now into the fourth quarter, buyers hesitated to place
new business. More attractive third country import offers,
especially in southern Europe, plus the likelihood of improved
availability from domestic mills in the autumn, led purchasers to
anticipate the possibility of some discounts, later in the year.
However, prices should be supported by new and existing trade
defence measures. For now, some minor downward corrections were
The German economy is performing well. The auto sector remains
healthy and construction activity is reasonable. Service centre
stocks are now mid-range, following some reductions. MEPS detects no
problems regarding availability from distributors. Strip mill
product basis figures weakened marginally, in July. Buyers report
more interesting offers from Asia.
Activity remained subdued, in France, in early July. Market
participants expected a noticeable slowdown in the second half of
the month. End-users were loath to build up stocks ahead of the long
summer holidays, due to uncertainty over future price trends. Basis
values stopped rising, in July, amidst rumours of lower domestic
prices in southern Europe and more attractive import offers.
Nevertheless, buyers report delivery delays from local mills, with
limited availability of material.
Italian basis figures began to erode, in July, partly due to the
traditional pre-August slowdown in activity. Cheaper imports, from
China, South Korea and India, also contributed to the downward
pressure. Real consumption, except by the carmakers, is fragile.
Moreover, uncertainty over the future development of prices caused
buyers to postpone purchasing decisions.
Short-term fallout from the UK referendum vote created a more
healthy environment for exports of both steel and finished goods, as
the currency weakened. Moreover, the UK is, presently, less
attractive to importers. However, currency movements pushed up raw
material costs for the steelmakers. Most flat product prices were
unchanged, in July, but continental producers are investigating the
possibility of lifting basis values to offset the weaker pound.
Shortages of standard sizes were reported by several distributors.
Few price changes were noted in the Belgian market, during the past
four weeks. Demand is reasonable. Buyers expect quantities of
Chinese and Russian material, ordered earlier in the year, to arrive
at the ports in September. This could put domestic mill values under
pressure. Customers anticipate small discounts once fourth quarter
negotiations get underway. At the moment, service centre stocks are
fair, partly because of delayed deliveries.
Import pressure and reducing apparent demand led to downward price
corrections in the Spanish market, when discussions for October
deliveries were finalised. Service centres, having rebuilt their
stocks, do not need to order substantial quantities, immediately. In
addition, buyers renewed their interest in third country imports,
which, recently, became cheaper than the high domestic values
reached in May/June. Low-cost imports are already starting to
Source: MEPS -
European Steel Review
- July 2016 Issue
MEPS - EU Steel
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