The negative price sentiment, noted last month, for sales of hot and cold rolled coil, was more pronounced, in May, in both the north and south of Europe. The upward trend for hot dipped galvanised coil values has stalled and weakness is evident in a number of countries. Spot business slowed amidst a reluctance to commit to forward transactions. Stocks in the supply chain are high. Quantities of material, ordered at the end of 2016/early 2017, in advance of price hikes, are now arriving at the ports or at customers’ warehouses. Moreover, recent limitations on domestic supply eased, as European mills caught up with order backlogs. Producers in third countries that are currently unaffected by EC antidumping measures, are making competitive offers to European customers. The recent strengthening of the euro against the US dollar also made overseas offers more attractive.
Underlying steel consumption is robust, in Germany, due to the healthy economic situation. However, recent supply tightness has eased considerably, especially for hot and cold rolled coil. Standard grades and sizes are on offer, at attractive prices, from sources such as India, Taiwan, Vietnam, South Korea and Russia. Service centre stocks are bloated. The upward price momentum reversed, in May.
A general downward adjustment was noted, in France. End-user activity, which fell in April, compared with March, was only moderate. May demand is expected to be slow, with several national holidays and the uncertainty brought about by the election. Decoilers are carrying relatively large inventories.
In general, Italian demand is stagnant and the market is fragile. The only sectors performing well are auto and mechanical engineering. As service centre stocks are high, buyers are in no hurry to re-order. Their sales are sluggish, as end-users await price developments. Resale values have fallen, resulting in poor profit margins. Ex-works strip mill product figures are under pressure due to the availability of competitively priced Indian, Turkish, Egyptian and Malaysian offers.
The UK manufacturing industry continues to perform strongly. Distributors report that end-users are busy. However, third trimester business was transacted at reduced prices. Third country import offers, from a variety of sources, are significantly cheaper than their domestic counterparts. Deals have been concluded for September arrival. In addition, inventory levels throughout the supply chain remain high, including material ordered from mainland European suppliers that is building up at the docks. Service centre sales are still healthy but profit margins are under pressure.
Domestic basis figures have reached their peak in Belgium, with negative movements monitored for third quarter deliveries. Distributors’ inventories are abundant, allowing them to postpone purchases. Import possibilities are available at competitive prices but customers show little interest. We detect considerable caution as many market participants believe that further decreases are likely.
Spanish basis values are falling quite sharply, despite satisfactory levels of consumption from a growing manufacturing sector. The perception of a negative price trend led to a lack of order intake at the mills, as buyers delayed purchasing decisions. End-users are pressing distributors for price cuts. Import offers are plentiful, for September arrival, but few deals have been concluded as customers are in “wait and see” mode.