EU Steel Prices Slip in
October as Sentiment Fades
EU steel prices for strip mill products either remained stable or
turned down slightly, in October. The negative movement was most
pronounced in the south of the region, i.e. Italy and Spain. EU
steel producers continue to target higher prices but face strong
resistance to this initiative. This comes, particularly, from
service centres, due to their inability to fully pass on previous
increases to their customers. Moreover, inventories at the
distributors are relatively high, enabling them to postpone
immediate purchasing decisions until the future pricing trend
Domestic mill delivery lead times are no longer extended.
Stockholders report that demand failed to recover after the holiday
period. Cheap offers from Turkish mills also undermined confidence
in the market. Nonetheless, EU steel prices are supported by a lack
of competitive quotations from other third country sources, the
existing safeguard measures and relatively high mill input costs.
Growth in the German manufacturing industry slowed, in September.
New export orders dropped sharply. In the steel sector, strip mill
product prices were, generally, stable, with some minor negative
adjustments, in October. The steelmakers continue to try to secure
increases. Market demand is reasonable, with the notable exception
of the vehicle manufacturing sector. Service centre stocks are
relatively high. Third country import offers are slightly below
European quotations, at present.
Despite the steel producers’ continued push for rises, French prices
remained stable, or declined, a little, in October. Activity has not
picked up since the summer. Distributors complain of a slow
September market – with reduced sales volumes, compared with the
same period last year.
In Italy, last month’s upward steel price trend has reversed.
Underlying demand is weak. Distributors report that sales reduced in
October, compared with the previous month. Their customers are
postponing order placement as they watch prices fall. Resale margins
are poor, with many stockists discounting heavily. Because
distributors’ resale prices are down, they are, in turn, pushing for
reductions from the mills.
Market sentiment weakened in the UK, in October. MEPS notes growing
uncertainty over the potential outcome of the Brexit negotiations.
Demand from the auto sector is particularly problematic. Prices for
several strip mill products softened, partly due to currency
exchange rate movements and pressure to match import offers from
Turkey. Service centres have sufficient stock to enable them to
postpone purchasing decisions.
Despite price hike proposals by the major EU steel mills, Belgian
market values softened, this month. Service centres report lower
than expected levels of activity, leading to higher than average
inventories. Their resale values are difficult to maintain as
end-users refuse to pay more because underlying consumption has
weakened. In some instances, payments to distributors are being
delayed, indicating a decline in demand.
The Spanish manufacturing sector recorded a slowdown in growth, at
the end of the third quarter. The €20 per tonne price hikes, secured
by domestic steelmakers, in September, were virtually wiped out,
this month, during negotiations for December/January deliveries.
High stock levels at the service centres and weakening demand led to
buyer resistance to the inflated prices. Volumes of imported
material, ordered earlier in the year, are now arriving. New third
country import offers are cheaper than a month ago, but few deals
were struck because of quota issues.
Source: MEPS -
European Steel Review
- October 2018 Issue
Also See: MEPS
All Products Composite Purchasing Price & Index
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