DOWNTURN IN EUROPEAN STEEL PRICES IS ALREADY BEGINNING - MEPS

The downward trend in steel prices, predicted by MEPS (International) Ltd. last month, has already begun for flat products in some European countries. Material has been in fairly short supply in recent months because producers have continued to restrict their output. Moreover, buyers have undertaken some stock replenishment, after paring back their inventories to minimum levels.

It was anticipated that the mills’ planned production increases would tilt the supply/ demand balance and halt the recent upward movement in prices. In fact, this has been exacerbated by the absence of any sign of a substantial improvement in end-user demand. The higher selling figures available have also attracted imports – particularly from Asia. Most flat steel products have become more readily available and values have started to fall in mainland Europe.

There are some exceptions. Holes in inventories have buoyed the price of galvanised steel in some countries. Furthermore, while plentiful supply has constrained commodity grade plate figures, it has been possible to achieve higher selling numbers for superior specification material.

MEPS’ research has found more optimism in the Nordic countries. Notwithstanding, it is not clear at this stage whether there is a pick-up in real consumption, or if it is an example of the region’s traditional lag behind the markets of Western and Southern Europe.

Demand for long products, too, has diminished after a brief period of restocking, and this will be aggravated by the seasonal downturn in construction activity. Small price increases for many products, at the beginning of October, were supported by earlier hikes in raw material values. However, scrap costs have since fallen and longs selling figures are destined to follow.
 

EU STEEL PRICES