Embolden EU Steel Mills to Lift Prices
EU steel coil prices moved upwards, during late July, as customers
booked tonnage to replenish stocks for supply after the summer
vacation. The increases, in Northern Europe, were quite modest,
whereas they were more pronounced in Italy and Spain.
The market was relatively quiet during August, due to the prolonged
summer holiday period. Activity remains subdued, in early September.
As delivery lead times at the EU steel mills are quite extended,
buyers are considering placing orders for supply in December
2018/January 2019. They are approaching these discussions against a
backdrop of price rise announcements from the steelmakers. MEPS
notes resistance to this new initiative, particularly from service
centres, due to their inability to fully pass on previous increases
to their customers. As current inventories are at a high level, the
majority of buyers are delaying order placement. Quite high volumes
of imported material, purchased earlier in the year, are expected to
arrive over the next two months. Underlying demand, overall, is
German consumption of strip mill products remains buoyant. Order
intake at the domestic mills is higher than normal for the fourth
quarter. A modest price rise was implemented at the end of July. The
steelmakers continue to try to secure further increases. Third
country import offers show little, or no, price advantage over
domestically produced steel.
As EU steel mills are pushing for more hikes, the price trend is
generally upwards in the French market. Increases are limited, for
now, but buyers anticipate that they will be forced to pay more for
strip mill products in the fourth trimester. Activity was slow to
resume at the beginning of September. However, expectations are that
it will pick up to the levels of before the holidays, in the coming
In Italy, the price upturn, reported in July, extended into
September. Local and regional mills continue to lift list prices for
forward deals. Their order books are strong. However, service
centres report difficulty selling to their customers at the current
high figures because most end-user sectors are performing poorly.
Moreover, distributors have relatively high inventories so are in no
hurry to replenish their stock levels.
A number of UK service centres reported busier than normal activity
in August. However, although their resale prices continue to
recover, they are not at the required level. Basis values, quoted by
EU steel producers, are above those reported, in July, for delivery
in October/November. Buyers believe that the producers will demand
another £20 per tonne for December/January business. For a brief
period, during the summer, favourable currency exchange rates led to
attractive deals being concluded with Turkish suppliers.
Strip mill product basis values strengthened, in Belgium, in
September. Steelmakers wish to boost prices by a further €20 per
tonne, in the near future. They claim a lack of raw materials and
limited imports, due to political and economic uncertainty. Service
centres note low levels of activity since the summer holidays. Their
resale values are difficult to maintain as end-users refuse to pay
more. Overcapacity in the distribution sector, together with low
demand, has resulted in downward pressure.
In Spain, domestic steelmakers secured increases of around €20 per
tonne for November deliveries. This was due to the uncertainty of
the safeguard measures and the expected replenishment of
inventories, following the extended summer vacation. Buyers are
faced with the prospect of a further rise for December business.
However, high stock levels at the service centres and relatively
weak demand are creating some resistance.
Source: MEPS -
European Steel Review
- September 2018 Issue
Also See: MEPS
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