MEPS PREDICTS A BUMPY
RIDE AHEAD FOR EUROPEAN STEEL SECTOR
The European steel sector has endured a very
tough time over the past year, mirroring the situation in the wider
economy. Steel prices were approximately 10 percent lower in the
first seven months of 2013, compared with the corresponding period
in 2012. Mill margins have been continuously squeezed. MEPS’
assessment for the price of iron ore fines (Fe 64%, FOB - Brazil)
has declined by only 2 percent in the same period.
A number of steelmakers have announced hikes to their list prices,
recently, in an attempt to improve their financial position. The
MEPS - EU Average All Products Composite transaction value reached a
forty month low in July. MEPS believes that modest increases will be
achieved after the summer break. Inventories are low and a slight
pickup in purchasing is expected to take place to cover customer
requirements for the final trimester. Rising scrap costs should
enable producers of long products to implement higher selling
figures. However, any upward movement is likely to be short-lived.
The fourth quarter is traditionally a period of weak demand and
prices are predicted to fall in October and November.
A more pronounced upturn in transaction values is foreseen around
the turn of the year as customers start to place orders for delivery
at the beginning of 2014. Steelmakers are expected to make
production cuts, during the winter break. This should lead to more
equilibrium between supply and demand in the new year. Consumption
should also improve during this period. The top of the price cycle
is forecast to occur in the spring because selling figures usually
slip back as the holiday season approaches.
Source: MEPS -
European Steel Review
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