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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.

Germany

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.

France

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

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.

Belgium

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.

Spain

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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IMPORT THREAT KEEPS MEPS BENCHMARK EU AVERAGE STEEL PRICE FLAT – MEPS INTERNATIONAL LTD

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

EU STEEL PRICES HOLD UP IN DIFFICULT MARKET CONDITIONS – MEPS INTERNATIONAL LTD

Flat product basis numbers are generally unchanged in western Europe, although MEPS can detect a little negative pressure in certain countries. Activity is picking up, albeit slowly, as the economic climate improves. Some steelmakers have decent order books. However, their raw material costs remain low, providing them with limited backing to lift selling prices. Many third country producers continue to reduce flat product prices. Buyers, in general, are beginning to show more interest, although, because of the long delivery lead times involved, much of this material would be arriving in the holiday period.

German buyers anticipate flat, or slightly lower, values in the third trimester. The direction will depend on demand, which, currently, is slightly better than in 2014. Service centres are busy supplying the booming auto industry and sales to construction are also satisfactory. However, distributors’ margins remain low because of overcapacity in that sector.

In France, market participants remain sceptical about reports of an economic recovery as they have seen no signs of it, so far. Activity in the steel market continues to be generally lacklustre, with some sectors, such as construction and energy, suffering more than others. For now, steelmakers are unable to raise prices. Third country import volumes have increased because the Chinese and Indian suppliers have aligned their prices to local values.

Italian flat product basis numbers are also below those reported last month, mainly due to import pressure. The number of Chinese offers, in particular, is growing. Industrial production activity in the first quarter 2015 was slow to start, although it accelerated a little in March. The only sector to record any real improvement was automotive. The recovery in carmaking is now the main driver of steel consumption in Italy. Ongoing attempts by steelmakers to lift prices should, at least, produce some stability.

UK service centres report that April business was still at a good level, although perhaps slightly down on March, in some instances. Resale margins are reasonable. Ex-mill basis values have stopped falling. Buyers feel that prices have now reached the bottom and, subject to exchange rate movements, will be similar in the third quarter. Traders are no longer pushing Chinese material, which is, currently, only slightly cheaper than European.

Belgian stockholders have plenty of material. There is a great deal of competition between them to gain orders. Consequently, their profit margins are thin. Market players expect the present situation to persist until September.

In Spain, steel buyers are waiting to see how the European mills will react to very attractively priced third country quotations. Decisions will have to be made quite soon if customers are to take advantage of these cheap offers. Already, some companies have booked overseas business as the price differential is quite large. However, domestic producers are reluctant to offer discounts as, at present, their order books are satisfactory because local consumption is improving and export sales are reasonably good. The situation is finely balanced.

Source: MEPS – European Steel Review – May Issue

MODEST DEMAND AND LOW INPUT COSTS KEEP EU STEEL PRICES IN CHECK

Slow purchasing activity over the last month has not supported the European mills’ desire to lift basis values for flat products. However, domestic steelmakers have reasonably good order books, thanks to improved export business on the back of a weak euro. Moreover, Ilva has been out of the market. Furthermore, a number of mills have been carrying out planned maintenance and/or have had production problems. All these factors led to a tightening of supply.

Third country offers from the Far East, which have been largely ignored because of their long delivery lead times, are still competitively priced, despite the devaluation of the euro against the US dollar. As European mill lead times extend, a number of buyers, especially in Southern Europe, are becoming more interested in imports. Russian material is also popular, given the fall in value of the rouble.

German customers report that the larger steelmakers are still talking of a €10 per tonne advance for second quarter business but buyers expect to pay comparable prices to those in period one. Offers from China are at similar levels to European ones. Demand from end-users is similar to that in 2014.

Activity remains generally weak in the French market, with end-users’ order books shrinking marginally this month. Distributors are competing against each other in a price war. The mills do not seem able to lift their strip product values. The disruption in deliveries, at the beginning of last month, caused by the situation at Ilva, led to a very limited price correction, if any.

Despite a cut in volumes from domestic steelmaker, Ilva, Italian prices have failed to recover. The market, generally, is dull. Demand is improving, albeit only slightly and from a low point. There is still uncertainty surrounding the Ilva situation but normal activity is slowly resuming. There is stronger pressure from imports, especially Chinese and Russian material. Competition in the distribution sector is severe.

In the UK, service centres were busy in February and March started well. Their profit margins are down a little because of falling mill prices. The tumble is almost entirely due to currency movements, which have enabled mainland European producers to offer more cheaply in the UK. Domestic mills have not yet declared their targets for May/June. Chinese suppliers are offering at £20/30 per tonne below current local values, for August arrival. Stocks of foreign material at the ports have gone down.

The Belgian market is relatively stable with little movement in either prices or demand. The mills are still claiming an increase of €10/15 per tonne. In some instances they have succeeded but, generally, basis numbers remain unchanged. While raw material costs remain low, they have no major reason to justify a rise. The euro is weak, helping to keep most third country imports at bay, for now, but the rouble is even weaker, encouraging a great many cheap offers from Russian suppliers. Competition in the distribution sector is fierce.

Spanish customers have agreed to pay slightly more for some strip mill products during recent negotiations as delivery lead times lengthen. In general, demand is at a similar level to that in late 2014, or even a little better. However, resale prices remain under extreme negative pressure.

Source: MEPS – European Steel Review – March Issue

EU STEEL PRICES FALL IN LINE WITH DROP IN INPUT COSTS – TO 58 MONTH LOW

According to MEPS International Ltd, European demand for flat products remains lacklustre as many customers try to minimise their inventories before the close of the financial year. Although the mills are trying to resist calls for lower basis numbers, in the majority of cases they have failed. Prices have continued to fall, following the trend in raw materials. Offers from Asia are not particularly competitive at present but supply from domestic sources is plentiful.

In Germany, quarterly contracts for period one 2015 have not been finalised completely. Some business has already been concluded for January at prices below those published in the November issue of MEPS European Steel Review. The downward pressure is not from third country offers but from cheaper raw materials. Demand is stable at an annual level comparable to 2014. A number of service centres are selling very cheaply in order to reduce their stocks for their financial year-end.

Activity remains at a subdued level in France. End-users are waiting until the last minute to order steel, while demand from stockholders is weak. Mills have short delivery lead times, which allow distributors to keep inventories low. Activity derived from the auto sector has been slightly better in 2014 than the previous year but still remains quite modest. The rest of industry has already agreed a discount for December deliveries. Some buyers foresee the possibility of further slight erosion for the first trimester. Purchases will only be finalised just before the holidays.

There is no good news for sellers in the Italian steel sector, where basis numbers are constantly slipping. Buyers claim that reductions in raw material costs are now having a very big influence on steel prices. Moreover, demand is described as ‘dead’, with December being considerably quieter than is seasonally normal. Market expectations are for further price decreases in 2015, so customers are reluctant to commit to forward orders.

UK service centres are enjoying healthy levels of business, although growth has now slowed a little, ahead of the vacation. Demand is still good and their margins are better than a year ago. There is minimal speculative purchasing and, in general, inventories are in balance. There are stocks at the ports but most of the material is pre-sold.

Low demand, together with shrinking raw material costs, has led to declining prices in Belgium. Distributors from the Netherlands and Germany are selling cheaply across the border, threatening resale values. Service centres are desperate to empty their stocks before the financial year finishes at the end of December.

Basis figures continue to tumble in Spain, where real consumption is stable but buyers are delaying their purchases as they watch the constant cuts in the steelmakers’ outlay on raw materials. They anticipate lower steel prices in the future.

Source: MEPS – European Steel Review – December Issue

FRENCH STEEL PRICE ROUNDUP FROM MEPS INTERNATIONAL LTD

In France, hot rolled coil prices are unchanged month-on-month according to MEPS. Negotiations are ongoing in many instances but buyers remain unsure that the higher price can be implemented.

Hot rolled plate basis figures are on the rise, following a significant reduction in volumes offered. German customers have been ordering large quantities in France, reacting to the slab shortages in Poland. This has led to expanding delivery lead times of nine to ten weeks.

Selling values, for cold rolled coil, are the same as those published in our July issue. Activity remains subdued.

The French vehicle manufacturers are faring slightly better than earlier in the year, which could help producers to lift coated steel prices. Consumption, in general, is tepid.

Prices for drawing rod are at the level reported two months ago. Those for the mesh quality are also the same as in July.

Producers are looking for an advance of €10/20 per tonne for Category 1 sections. This was still under negotiation at the time of MEPS research as many distributors still have sufficient stocks. The rise will be easier to secure on the larger sizes.

Construction activity is weak. Industry participants are still waiting for the government to implement measures to boost private construction. Public infrastructure is faring better. Producers have gained a modest, cost-driven price hike for rebar.

Merchant bar effective values are up through the application of the new size extras. There has been no revival in sales volumes.

Source: MEPS – European Steel Review – September Issue