European producers of flat steel products have, so far, failed to close deals for the second quarter at the target prices they initially announced. Falling input costs have hindered the mills’ aspirations. Moreover, offers from third country sources are becoming more competitive, although the lengthy delivery lead times involved are still considered to be a big risk in today’s market climate. Domestic steelmakers are hopeful that a small increase can be secured for orders placed over the next few weeks. Economic indicators remain good in several countries.
After a weak start to the year, demand from German end-users is now either stable or growing. However, customers are not yet ready to pay the proposed second trimester increase of €30/40 per tonne. Producers have already lowered their expectations to around €10/20 per tonne.
The French market has been described as lethargic, lacking dynamism, with stagnant average demand since January and even sagging end-user activity. In such conditions, it has not been possible for producers to lift their prices.
In Italy, market players are viewing the changing political environment with great caution. MEPS has noted a number of negative developments in the steel sector. End-user activity has slowed, creating pressure in the distribution segment. The mills have become more flexible in their attitude during price negotiations.
In the UK, the announced increases have not filtered through to the market. The strong local currency is working in the favour of importers, both from mainland Europe and from third countries. Service centres report that demand is still reasonably good but may have slowed a little.
In Spain, there is still pressure from domestic producers to lift basis figures for second quarter business but import offers are becoming cheaper. Consequently, for now, customers are reluctant to accept increases. End-users are also refusing to pay more to the distributors.
Source: MEPS – European Steel Review
Steel market participants have, for some time, been predicting a moderate pickup in steel sales volumes and prices, in northern Europe, during the first half of 2014. Although there has been no spectacular increase in tonnages, the mills schedules are filling and delivery lead times are lengthening. Selling values for most products have recorded small advances, in January, in the majority of countries reviewed. In all other cases, gains are anticipated in the near future.
Coil producers need increased prices in order to be profitable. Accordingly, they have proposed higher numbers for January or first quarter contracts. While the new figures were not immediately accepted in all instances, buyers concede that values will rise in the near term. Offers from third country suppliers are only marginally cheaper than from European mills and are, therefore not attractive.
The market for reversing mill plate remains weak compared to that for strip mill products. Transaction values have risen slightly in Sweden. Market participants in other countries foresee possible small increases during the first half of this year, although some sellers believe they may have to wait until the second quarter to achieve higher volumes and prices.
There has been no severe winter weather, so far, in northern Europe. Consequently, demand for long products, from the construction sector, has held up at a higher level than is normal for this time of year. Furthermore, scrap prices increased in December. As result, transaction values for structural sections rose, in most countries, in January. On the other hand, rebar prices, in most instances remained stable. Merchant bar values have recorded moderate advances, supported by improving demand from the manufacturing sector.
Source: European Steel Review Supplement
Service centres in the US flat products market report a slower than anticipated start to 2014. Although ex-mill transaction values have increased, there does not appear to be much upward demand pressure at present. Steelmakers continue to announce cost-driven price hikes as scrap escalates. Inventories throughout the supply chain are light. As prices rise, producers are closely watching the import situation. For now, buyers are showing little interest in offshore material.
The Chinese market is quiet ahead of the week-long New Year celebrations at the end of this month. Traders are keen to offload their stock and prices have fallen accordingly. Softening raw material costs are hindering the situation.
Economic conditions are improving rapidly in Japan, creating a perfect climate for the steelmakers’, much needed, price rises. The weak currency continues to deter overseas suppliers. However, it is also making imported raw materials more expensive. A number of producers are also concerned about escalating electricity charges. Export business is weaker as demand in the key Asian markets is dull and supply remains in surplus.
The South Korean domestic steel market is slow to recover and overseas sales are also lacklustre. Local mills have a multitude of trade cases outstanding against them at present. Despite high input costs, steelmakers are unable to lift their prices.
The Polish economy is on the mend, with new investments from the European Commission helping to boost activity. Proposed mill price rises of €40 per tonne have not yet been implemented.
It is difficult to assess the future direction of the Czech/Slovak steel market at present. However, there does appear to be some underlying optimism. Transaction numbers have moved up this month and buyers are expecting stability from now on.
According to the latest report from MEPS International Ltd, there has been very little activity in the European flat products market in the first two weeks following the Christmas and New Year holidays. The domestic mills still have little competition from third country suppliers who are offering at similar levels but with much longer delivery lead times. MEPS noted some small basis increases in several countries in late December when producers withdrew most of their cheapest deals. Steelmakers do not consider that current prices are satisfactory and insist they need to lift them by €30/40 per tonne for April deliveries. Most first half 2014 contracts with the auto industry have been concluded at the same price as in the second half of last year.
In the German market, many companies that did not order from the mills at the end of 2013 may now need to restock. So far, there has been only steady purchasing activity. Chinese suppliers are trying to sell material but their offers are at similar levels to those from the domestic producers.
The French market started up very slowly, following the end-of-year break. Market participants expect only a small number of new orders to be placed before mid-January. The mills are currently consolidating the modest rise obtained in December and pushing for further increases.
MEPS reported a marginal improvement in Italian flat product basis numbers but there is a great deal of caution in the market. Sales have been better than expected but economic recovery is likely to be very fragile. Business at Ilva’s Taranto works has not fully returned to normality, although there should be less uncertainty from now on.
Growing optimism has developed in the UK steel industry. However, the strengthening pound makes the market more vulnerable to import offers, whilst at the same time stifling exports. A number of service centres report a promising start to 2014 and November was the busiest month of last year for large stockholders. Resale values are reasonably firm. The basis figures we last reported for January business also apply now for February. Steelmakers are hoping to achieve higher selling figures for March but demand will dictate how hard they push. Mainland European suppliers are already benefiting from the currency exchange rate differential.
Source: MEPS – European Steel Review
Also See: MEPS – EU Steel Prices Online
The prevailing sentiment throughout the stainless steel supply chain is one of “cautious optimism” that 2014 will be a little better than 2013, in terms of both business volumes and profitability.
Market participants have been, for some time, expressing the view that activity and prices have been bumping along a prolonged bottom in the business cycle and that that situation is close to its end.
A number of major western industrial nations have begun to record encouraging economic indicators, such as positive GDP growth, increasing manufacturing output and falling unemployment. The Japanese government’s economic stimulus measures, or “Abenomics”, have, at least in the short term, boosted industrial activity in a market that has been in the doldrums for two decades.
MEPS forecast for crude stainless steel production anticipates growing output in all the traditional stainless steelmaking countries and regions – the EU, the United States, Japan, South Korea and Taiwan. This would be the first time this has happened since 2010. Furthermore, stainless steelmaking capacity continues to grow in the developing markets, despite existing oversupply. We, therefore, predict output in China and other emerging countries to continue to increase slightly faster than in the West.
Nickel values are expected to rise in the early part of this year, despite the enduring global surplus. The medium-term effects of Indonesia’s imminent ban on mineral ore exports remain uncertain. Meanwhile, further hikes in ferrochrome prices are foreseen during the first half of 2014. Although stainless steel suppliers have, so far, reported no sign of a significant upturn in order tonnages, the belief persists that there will be a moderate increase in activity in the coming months and that 2014 could be the industry’s best year for some time.
Source: MEPS –Stainless Steel Review
An upturn in steel prices in North America and the European Union at the end of the year, pushed the MEPS world composite benchmark steel price to its highest level since March.
US demand for flat products is stable but expected to show some signs of growth shortly. Inventories throughout the supply chain are tightly controlled at a low level. Ex-mill transaction values have continued to escalate over the last month. Producers’ scrap costs are also rising. With good order books for the first quarter 2014 and extending delivery lead times, the steelmakers may well endeavour to hike prices further in the coming weeks.
In Canada, mill rolling schedules are reasonably full with order placement now well into February. Transaction figures are firm and, in some cases, above those of the previous month. However, at the service centres, demand is still inconsistent. It is a struggle for them to pass on all the mill increases to resale customers, who are only purchasing what they currently need, rather than rebuilding stocks. Nevertheless, buyers believe there is still room for further price improvements.
The recovery in the Japanese economy continues, leading to healthy and growing steel consumption. Producers are slowly, but surely, securing their proposed price rises. Inventories held by dealers are now well controlled. Export figures are also moving up, helped by the weak yen, although volumes have fallen as demand in key Asian markets is dull. The depreciated currency is also discouraging cheap imports.
The basis increase scheduled by the West European flat products producers for the first quarter 2014 has not been secured for January production. Demand remains slow across the region. Negotiations for the remainder of period one are ongoing. Long product prices have advanced slightly as the mills take advantage of upward scrap movements.
Source: MEPS International Steel Review