The MEPS EU average hot dipped galvanised coil transaction value has soared, during the last twelve months, due to tight supply and rising zinc prices. The figure in April now stands at its highest point since October 2008. However, the upward price trend slowed significantly, this month.
Slight negative sentiment was noted, in several countries, during negotiations for purchases of hot rolled coil, in April. The tendency was strongest in the south of Europe, where cold rolled coil figures also softened.
Order books at domestic mills are healthy and capacity utilisation is high. However, third country import prices, from sources not affected by antidumping measures, are lower than a month ago and attractive to steel buyers. Moreover, many of these exporters quote delivery lead times that compare quite favourably with those of domestic steelmakers. For the moment, local producers are not targeting further price advances.
Conditions within the German manufacturing sector continue to strengthen. Steel consumption is firm. Service centres purchased substantial quantities of strip mill products in advance of recent price hikes. Inventories are now higher than at the start of the year and still growing. Availability of third country material, in standard grades, is plentiful, from the docks at Antwerp, at advantageous prices. The upward price momentum on domestically produced hot and cold rolled coil has stalled.
The French market remains stable in terms of activity and price. Buyers anticipate little change in the short term. Decoilers are carrying relatively large inventories, leading to reductions in the selling values of their hot and cold rolled sheets. Distributors are reported to be quite well-stocked or awaiting deliveries of orders already placed.
The weakening sentiment that hit the Italian market, this month, is reflected in domestic basis figures. Local demand appears to have slowed, whilst inventories at the service centres are high. End-users no longer need material urgently. Resale values, in general, are keeping pace with mill movements.
UK manufacturing output continued to expand, in March. Distributors report that sales of strip mill products are good and profit margins are maintained, in most instances. With the exception of hot rolled coil, forward prices are firm, this month. However, inventory levels throughout the supply chain are high. This has prevented further increases from being implemented. Buyers are behaving cautiously as they anticipate small price contractions over the summer.
Belgian suppliers no longer target an increase in basis figures for hot and cold rolled coil. Few advances were noted, with the exception of hot dipped galvanised coil prices, which were driven up by the cost of zinc. Distributors’ inventories are bloated, allowing them to postpone purchases at today’s prices. Customers now show more interest in third country imports.
Spanish manufacturing output continued to rise, in March. However, the rate of growth eased, for the third consecutive month. Underlying steel demand is satisfactory. However, the market is quiet. Service centres hold sufficient stock to cover present requirements, with no urgency to re-order. Consequently, basis values have softened. Distributors need to manage this reversal in the price trend to impart the least damage on their profit margins. For the moment, their selling values are decreasing at a faster rate than their purchasing prices.
Source: MEPS – European Steel Review – April 2017 Issue