EU Safeguarding Measures Influence Stainless Steel Purchasing Behaviour

EU Safeguarding MeasuresThe EU’s recently announced temporary quotas and tariffs on steel imports, arising from the Commission’s safeguarding investigation, might have been expected to push prices of stainless steel upward, in the European market. However, some buyers have chosen to expand their placement of import orders, in the short term, to maximise their own intake of low priced material, before quotas are exhausted. This has the effect of reducing demand for locally produced material and, thereby, places downward pressure on prices.

This should be short-lived. Many stainless steel buyers are wary that, given the long delivery lead times on orders from, for example, the Far East, material ordered now could arrive in Europe after the appropriate quota has been filled and, therefore, incur tariff charges. Consequently, they are more likely to source their requirements from European mills – in turn, applying inflationary pressure, in the regional market.

Source: MEPS – Stainless Steel Review

Mixed Trend in EU Flat Product Steel Prices in July

Mixed Trend in EU Flat Product Steel Prices in July


German consumption of strip mill products is healthy. Availability of commodity grade material is good. The steelmakers are trying to implement a rise of €20/30 per tonne in the general market, for October deliveries. Currently, service centres are well booked for third trimester business, but resale margins remain under negative pressure. Third country import offers show little price advantage against domestically produced steel.


In France, distributors supplying the auto industry continue to indicate very strong sales. Supply difficulties were reported, with some delivery problems regarding material sourced in the Netherlands and Germany. Spot values were stable or slightly down, in July. The steelmakers’ announcements, to raise figures by €20 per tonne, met with a large degree of resistance. Service centres are not willing to order at increased prices, considering the level of their resale values and competition in that sector from mill-owned distributors.


Growth in Italy’s manufacturing sector improved, during June. However, general market sentiment has softened. Nevertheless, the recent price erosion was halted, in July, with the price trend reverting to a positive one, albeit from a very low base. All local/regional mills raised list prices, in tandem, as slab costs escalated. Inventory levels were reduced, prompting buyers to make stock purchases. Supply uncertainty exists due to the EC safeguard investigation. Moreover, the majority of mills will, shortly, be undertaking scheduled summer maintenance. Buyers anticipate further hikes, after the holidays, in September. However, resale margins at the service centres remain poor.

United Kingdom

The performance of the UK manufacturing sector remained relatively subdued, in June. Nevertheless, a number of steel stockholders reported good levels of activity and quite strong demand. Their resale prices continue to recover but are still not at the required level. Independent distributors continue to complain that mill-owned service centres are selling aggressively, thus lowering customers’ price expectations. Trader stock levels have dwindled as they are unwilling to take the risk that retrospective duties may be applied. Basis values, quoted by steelmakers, are similar to those reported, in June. Delivery lead times are extending into October.


Strip mill product basis prices remained stable, in Belgium, in July. Sellers would like to impose a rise but the onset of the Belgian holidays, in mid-July, have, so far, enabled buyers to postpone purchasing decisions. Distributors’ resale values, which were reflecting steel costs, recently weakened, as end-users refused to pay more. Inventory levels are normal to low. Customers complain of delayed deliveries from the steelmakers.


Spanish manufacturing business conditions continued to improve, at the end of the second quarter 2018. However, the rate of growth in the sector remained muted, compared with earlier in the year. Nevertheless, distributors report a relatively quiet market. Despite the mills’ announcements of a €20 per tonne rise, strip mill product figures were stable, in July. Currently, import offers are uncompetitive. Buyers anticipate that domestic price increases will be secured, once negotiations are concluded.

Source: MEPS European Steel Review


Global Steel Sector in Turmoil

EU Steel Prices Slip as Purchasing Slows

During June, the European steel market continued to be affected by rising global trade uncertainty. Steel buyers, particularly at the distributors, were, where possible, postponing their purchasing decisions. Moreover, political upheaval, in parts of the region, led to a lack of investment. As buying activity slowed, prices, for strip mill products, registered modest downward movements, in June. Meanwhile, contract negotiations with OEMs, for the second half of 2018, are ongoing, with producers looking for small price increases. Healthy underlying demand supports the proposed hikes, although a softening in raw material costs does not.


In May, a further slowdown in the pace of German manufacturing growth was recorded. Availability of standard grade strip mill products is good. Steelmakers are well booked into the third quarter. However, a number of buyers note that restrictions on the purchase of additional quantities have abated. Third country imports are rarely competitive. Producers are demanding increased prices, from contract customers, for the second half of 2018. The initiative has met with a degree of resistance. Meanwhile, recent spot market business was negotiated at slightly lower figures than a month ago. Service centres continue to cut their resale values in order to try to stimulate sales and reduce stock levels.


French demand for strip mill products continues to be supported by the auto industry. Mills in northern Europe are reporting full order books, with delivery lead times at fourteen weeks, in some instances. Basis values continued to decrease a little, in June. Activity slowed, in May, and the expected pickup has not yet materialised. However, according to distributors, sales volumes remain acceptable, although inventories are relatively high. Moreover, ongoing strikes are adversely affecting transportation.


Italy’s manufacturing sector continued to expand, in May, albeit at a slower rate than earlier in the year. Spot market prices are under negative pressure as a result of political upheaval, market uncertainty regarding the US Section 232 disruption and reduced purchasing by distributors. Further price falls cannot be ruled out. Underlying consumption is reasonable. However, customers believe that the downward price trend will continue, as a result of weak order intake at the mills.

United Kingdom

UK distributors report that sales activity is slowly recovering. However, their resale margins are still unsatisfactory. Independent service centres complain that mill-owned distributors are selling aggressively, thus lowering customers’ price expectations. Both the auto and construction industries continue to underperform. Basis values quoted by steelmakers are similar to those reported, in May.


Small negative price changes were noted, in the Belgian market, in June. The economy is slowing, with growth forecasts revised downwards. Buyers are slow to make purchasing decisions. In general, distributors’ resale prices reflect replacement costs but margins are below recent norms. Service centre stocks are relatively low. Domestic mill quantities are limited. Import pressure is lacking. Overseas deals were on hold, in early June, as buyers awaited the outcome of the Section 232 measures.


Spanish manufacturing output growth eased downwards, in May. The steel market remains quiet, despite healthy underlying consumption. Expectations of lower prices, in the near future, led to a ‘wait and see’ attitude amongst buyers, especially at the service centres. Distributors reported reasonable sales, in May, but complain that June order books are shortening. Although current import offers are not particularly attractive, overseas material, booked earlier in the year, is now arriving, resulting in high inventories. Domestic price corrections were noted, for all strip mill product categories, this month.

Source: MEPS European Steel Review – June 2018

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According to MEPS, the price direction for European strip mill products reversed over the course of the summer. Minor downward corrections were noted in July. Upward momentum, which began in late August, is ongoing. Small, positive movements of €10/20 per tonne have already been noted. ArcelorMittal announced a rise of €40 per tonne for deliveries from November onwards. The premium was above the levels achieved in the third quarter. Many buyers anticipate that they may be forced to pay more in the future.

Overall consumption is largely unchanged but availability is tight due to lack of third country import opportunities. This resulted from planned and existing trade defence measures and higher prices demanded by many overseas suppliers. Thus, the order load on European steelmakers increased, leading to long delivery lead times. Moreover, processing problems at a number of production facilities caused short-term issues and some backlogs.

MEPS reports that European long product selling values weakened over the summer. Current demand is not sufficient to support a price rise in the short term. Customers are not restocking in the traditional autumn manner. Consequently, producers are unable to fill their rolling schedules. Discounting was noted as delivery lead times shortened.

Source: MEPS – European Steel Review – September 2016 Issue


There is downward price pressure in most countries researched, in July. Fierce competition, between both domestic and third country suppliers, is intensifying. The upcoming summer holiday period in some nations is adding to the negative trading environment.

In the US, steelmakers appear to be bucking the trend witnessed in the global scene. Recently announced price rises are starting to filter through to the market, with increases recorded in local values for some strip mill products, this month. However, stock levels are elevated and domestic sales volumes are softening. The potential for further advances in transaction figures, in the near term, appears limited. There remains a heightened threat from imports, despite antidumping investigations now under way.

In Canada, the large inventory overhang is taking time to reduce. The domestic market is weak but the number of enquiries is growing. Customers are cautiously optimistic for the future.

In Japan, sales have slowed and inventory adjustment is yet to be completed. Local steelmakers are planning on cutting production, in the July/September period, in a bid to re-balance supply and demand. Import volumes were down and export sales were up, in May, year-on-year.

South Korean producers are supplementing poor domestic sales with increased shipments to overseas customers. However, this is upsetting suppliers in the importing countries and is attracting antidumping filings against them from some nations. Deliveries of third country material into the local market are slowing.

In Taiwan, major integrated producer, CSC, announced reduced list prices for September deliveries. As a result, market values have deteriorated, in July. Demand from foreign and domestic customers is weak.

There is negative pressure from CIS-origin material, in Poland. Nevertheless, prices have remained stable, this month, as domestic demand is reasonable for this time of year. Selling values have reduced in the Czech and Slovak markets. Sales activity is sluggish to many steel consuming sectors, with the exception of the automotive industry.

Prices in western Europe have deteriorated, in general, in July. Fierce competition from overseas suppliers is forcing domestic mills to lower their offers. Southern Europe is taking the brunt of the imports. However, material has been penetrating the northern markets, of late. Transaction figures could decrease further during the summer.

Source: MEPS International Steel Review – July Issue


Overall, demand for flat products is reasonable in Western Europe. Buyers are anticipating the arrival of large quantities of third country material during the summer, particularly at ports in the south. Following concerns about the increasing impact of imports on the EU steel market, the European Commission has initiated an antidumping investigation into cold rolled coil imports from China and Russia. Negotiations have started between the domestic mills and the auto companies for second half 2015 contracts. Producers would like a rollover of the first half prices but the carmakers are expected to ask for lower values because the steelmakers’ input costs are down.

Demand is holding up in Germany with business in the first six months described as acceptable, with auto leading the way. Forecasts suggest that building activity may be down slightly in the second half. Buyers are receiving new offers from third country sources but many consider the price benefits to be too small when compared to the long delivery lead times. However, they are aware that large volumes are already on the way. There is plenty of material quickly available from domestic sources.

Activity on the French market is still weak in major consuming sectors, such as construction and energy, whereas the auto industry is faring satisfactorily. Competition between distributors is fierce. As a result, a number of warehouses have closed down. Ex-mill basis values have remained relatively stable since last month. There is some pressure from overseas suppliers, which has left domestic producers struggling to maintain selling figures. Import quantities have climbed since the start of the year.

Although internal demand remains depressed in Italy, there are small signs of recovery, mainly in the auto sector, so far. Domestic basis values have deteriorated further, driven down by poor sales, high levels of availability and increasingly aggressive offers from China and India. Considerable volumes have been booked for arrival during the summer holidays. As a result, buyers do not expect prices to recover during 2015. Competition in the distribution sector is severe, with service centres so hungry for business that they concede discounts on a daily basis.

Consumption is said to be reasonable in the UK, with the manufacturing sector fairly busy. Service centre sales have been healthy. Stocks are well balanced with demand. Producers are willing to be flexible during negotiations and prices are down, a little. Resale values have declined in tandem with the ex-mill figures.

Belgian service centres are keeping inventories low because they can obtain material quickly from local mills, who, in some instances, are carrying stock. End-users are only purchasing what they need for immediate use. Imports are available from China and Russia.

Underlying consumption is slowly improving in Spain, where domestic basis numbers are unchanged from May. However, the market is slow. The summer vacation period is approaching and large quantities of pre-booked, foreign material are still to arrive.

Source: MEPS – European Steel Review – June Issue