The European Commission is investigating the possibility of implementing additional trade measures against steel imports. It will focus on the potential diversion of trade which may result from the imposition, by the USA, of a 25 percent tariff on steel imports from a range of countries worldwide. The announcement created further speculation and uncertainty in the marketplace, not only regarding supply alternatives but also the effect that it could have on steel prices – both for flat and long products.
So far, strip mill product prices have not been directly affected. However, many customers, who, at present, are well stocked and have material already on order, can afford to postpone further purchasing decisions while they reflect on the eventual outcome. This has prevented further upward price momentum, in April, and even led to small negative corrections, in some instances, according to the latest edition of MEPS European Steel Review.
Output growth, in the German manufacturing sector, slowed, for the third consecutive month, in March. Nevertheless, steel demand remains relatively strong. Recent strip mill product business was negotiated at figures similar to those reported last month. Order intake at the domestic mills is positive, with bookings for the third quarter now in progress. Distributors’ stocks are well tuned to expected activity levels. Third country import offers are available from Turkey and Brazil but prices remain quite high.
Activity is at a good level, in France. Prices are relatively stable, this month. However, distributors report a slowdown in order intake since the end of March/beginning of April. Inventories are high, at a number of companies. The auto industry continues to be the main driver for strip mill products demand. In general, buyers report better availability, while mill delivery lead times are decreasing a little.
Italy’s manufacturing sector continued to expand during March, although the pace of growth slowed. However, market sentiment has softened. The formation of a new government is protracted, leading to a halt in new investment. Moreover, uncertainty exists regarding trade in global steel markets. Buyers, who bought heavily in the first quarter, can now afford to wait before reordering. Mill delivery lead times are reducing, for strip mill products, with the exception of hot dipped galvanised coil. Several small, downward price corrections were noted, during April negotiations, for material to be delivered in June/July. Resale values remain under pressure.
In the UK, distributors report improved sales volumes. Supplying mills’ delivery lead times are out to July/August. Basis values were rolled over during recent settlements. Resale prices, which were under negative pressure, due to high service centre inventories, are starting to rise, as stock levels reduce. Nevertheless, independent distributors continue to complain that their integrated counterparts are selling aggressively. Third country quotations are limited.
The Belgian economy is healthy, with robust steel demand. Strip mill product spot prices are stable. The European steelmakers are claiming an increase for the third trimester. Alternatives to domestically produced material are difficult to source. Although third country importers reduced their quotations, MEPS detects little incentive to purchase from overseas, as the price differential is quite small. Distributors are busy. They report that replacement costs can be incorporated into their resale prices without much difficulty.
Spanish manufacturers recorded a further marked improvement in business conditions, at the end of the first quarter of 2018. Steel demand is healthy and stable. However, service centre stocks are at an acceptable level, enabling buyers to wait before placing new orders. Quotations from importers reduced, in late March/early April. Domestic price corrections were noted by MEPS for all strip mill product categories, this month. Buyers are nervous that further weakness may develop, ahead of the summer vacation. Service centres have not fully succeeded in recouping the recent mill hikes from their customers.
MEPS European Steel Review is published every month and provides accurate, independent data and analysis on the European steel industry.