MEPS – NORTHERN EUROPEAN STEEL PRICES TO PEAK SOON

Flat products prices in Northern Europe continue to soar but are still being driven by raw material costs rather than by underlying demand. Contracts for July or third quarter deliveries are forecast to be agreed at selling values higher than MEPS is stating in this review. However, the much anticipated pick up in demand has been slow to materialise and inventories have grown steadily in recent times. Ex-mill sales are, therefore, likely to be quiet in the coming months and prices may soften for deliveries after the summer break.

Most long products prices agreed in May - usually for June rolling or delivery - were higher than those settled during April, as they were related, either formally or informally, to earlier scrap values. However, selling figures for scrap softened in May and, unless they turn upwards again, it seems unlikely that longs prices will climb further. Indeed, we have some reports of recent agreements being made at lower figures than a week or two earlier. Moreover, the period of stock replenishment and forward buying appears to be over. Consequently, sales activity in the third quarter is likely to be quiet.

Consumption of stainless steel has increased a little in recent weeks but by less than the upturn in carbon steel volumes. Sales tonnages have been reduced in May as customers bought ahead of this month's high alloy surcharge figures and now anticipate a possible fall in June, due to the recent softening in the LME nickel value. Real demand has not picked up significantly although activity in car and white goods manufacturing has increased and some offshore and energy-related projects are under way.


Source: European Steel Review Supplement - EU STEEL PRICES