Weak Demand Prompts Further Capacity Cuts As Producers Seek To Recover Costs

Excess production capacity persists within the Nordic and Western European flat steel products markets. Idling of blast furnaces and ArcelorMittal’s withdrawal from its takeover of the Ilva facility may go some way to addressing this issue. Monthly contract or spot prices continued to fall during November. However, supply chain participants believe that the bottom of the current price cycle is close.

Hot rolled coil sales volumes are fair, in Denmark, but end-users, in the wider region, report falling order tonnages. Inventories, within the supply chain, are high, in Sweden and Norway. Local demand is mediocre, in Finland and the Netherlands. Austrian selling figures are on a downward trend, affected by poor sales and recent drops in scrap costs.

Transaction values for hot rolled plate, in Denmark and Finland, fell again, in November. Subdued end-user demand is exacerbated by buyers’ caution, due to future price trend uncertainty. Swedish consumption remains disappointing. Shipbuilding activity is satisfactory, in the Netherlands, but demand from agricultural equipment manufacturers is poor. The Austrian market remains muted. In Norway, demand from the offshore oil and gas sector is strong but a slowdown is foreseen, in 2020.

Producers of cold rolled coil are expected to seek price increases soon, although they may not achieve these until February or March 2020. Danish prices slipped again, in November. In Sweden, sales of commercial grades are satisfactory. Consumption is moderate, but reducing, in Finland. Distributors, in the Netherlands, are minimising their stock levels ahead of the calendar year-end. Austrian suppliers report a lack of orders for first quarter 2020 delivery. In Norway, delivery lead times, from regional mills, are very short.

Depressed activity in the auto supply chain continues to inhibit demand for coated sheet and coil in Sweden, Denmark and the Netherlands. In Finland, offers from Russian suppliers are very aggressive but delivery promises are known to be unreliable. In Austria, sales to building-related applications are healthy. Lacklustre consumption contributed to a small price cut, in Norway.

Drawing quality wire rod sales volumes remain reasonable, in Sweden. A “year-end effect” is being experienced in Finland, as customers consume their inventories rather than placing new orders. Transaction values were unchanged, in local currency terms, in all the other countries surveyed, in November.

Regional mills report satisfactory order loads for medium sections and beams, although it remains possible to book some December rollings. Stiff competition, amongst supply chain participants, continues to push beam prices downward, in Sweden and Denmark. Construction activity is cooling, in Finland and the Netherlands, but remains quite busy, in Austria. Demand is fair, in Norway.

The seasonal slowdown in the reinforcing bar sector has begun but Scandinavian demand remains better than that in the rest of Europe. Reasonable consumption continues, in Finland, with projects in wind power, mining and the manufacturing sector. Producers may seek increased prices soon, in the Netherlands, following the recent rebound in scrap costs. Selling values softened, this month, in Austria, due to low raw material outlay and weak demand. Activity is fair, in Norway,

Domestic demand for merchant bars is steady, at a low level, in Denmark. In Sweden, sales to automotive and other manufacturers are weak. Local purchase volumes are fair, in Finland, but exports to Germany have decreased. In the Netherlands, regional mills are beginning to propose price increases. Weak demand and depressed raw material costs prevail, in Austria. Manufacturing activity is subdued, in Norway.

Source: MEPS International Ltd.MEPS European Steel Review Supplement