EU Flat Product Steel Price Roundup from MEPS

Strip mill product basis prices, for second quarter 2018 delivery, moved up in many European markets, in January. Regional producers continue to promote further rises, in order to achieve their new target values, announced in December 2017. The increases negotiated, this month, are supported by the absence of attractive third country import offers, good order books at the domestic steelmakers, an upturn in mill input costs and a gradual improvement in demand, as distributors restock.

Strong growth in Germany’s manufacturing sector has translated into buoyant steel demand. Domestic mill delivery lead times are extending and third country material is difficult to source at competitive prices, due to trade defence measures and rising international selling figures. Distributors started to rebuild their stocks in early 2018. Second quarter business for strip mill products was negotiated at prices above those reported in December 2017. Domestic steelmakers continue to push for more.

The price trend remains positive in the French market, as producers continue to propose increases. It was expected that these would be implemented for strip mill products but acceptance has yet to be fully confirmed. Delivery lead times from European steelmakers remain extended, with mills declaring full order books for the first quarter. Moreover, import offers are more expensive than domestic values. Even though January order intake began slowly, distributors are confident that activity will resume on a steady level, following very brisk sales in the month of December. However, a number of customers stated that they will restrict purchases, this month, as stocks are already at an adequate level.

Price rises proved problematic for the Italian mills, in early December 2017. Basis values finally began to move up later in the month, as domestic mills lifted their price offers in line with higher quotations from third country suppliers. Now, the steelmakers are asking for further hikes, based on the escalating costs of raw materials and a more robust demand situation.

UK manufacturing output is expanding at its fastest rate since 2008, after recording a seventh consecutive month of growth, in November 2017. Stocks, at the service centres, however, are still relatively high, creating negative pressure on resale values. Nevertheless, distributors’ sales of most strip mill products are reasonably brisk, following the return from the Christmas/New Year vacation. Import offers from third country sources continue to be higher than domestic quotations. Basis values are unchanged, at present. However, ArcelorMittal recently announced an increase for second quarter deliveries.

Although the Belgian steel market was slow at the start of January, sales began to pick up quite quickly. Domestic steelmakers pushed hard for price rises, citing escalating production costs. Moreover, competitive offers from third country suppliers are scarce. Quantities from European mills are also limited, with delivery lead times extending into the second trimester. Buyers are prepared to pay more for March deliveries and expect even higher prices when deals for the second quarter are finalised. Resale values are also climbing, as most distributors apply the new increase in mill prices.

Spanish service centres report healthy sales volumes. In early January, buyers settled for their March/April deliveries, conceding a €10/15 per tonne rise. Resale values continue to be problematic. Customers are purchasing only small quantities. Import prices, for April/May arrival, having moved up sharply, are no longer attractive.

Source: MEPS – European Steel Review – January 2018 Issue

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