EU STEEL PRICES REMAIN
UNDER NEGATIVE PRESSURE
European strip mill product prices continued
to erode, in December. Domestic steelmakers are prepared to offer
concessions in order to secure production volumes. Despite the
tendency of most steel mills to try to increase basis values, the
reality is that they are struggling to hold on to current figures.
Material, in the general market, is plentiful. This is partly due to
the significant reduction in demand from the auto sector. Mill
delivery lead times continue to contract. Competitively priced
imports are available.
Meanwhile, customers are reluctant to book forward orders, expecting
further downward price movements. They are beset with uncertainties.
These include the lowering of European manufacturing output, the EC
safeguard quota system, political problems in Europe and other parts
of the world, plus the threat that tariffs may be imposed on car
sales to the USA. Moreover, inventories, particularly at the service
centres, are, currently, sufficient. This enables buyers to postpone
purchasing decisions until the future pricing trend becomes more
The German manufacturing sector lost further momentum, in November.
Strip mill product prices declined in December, owing to reduced
demand, from all steel-consuming sectors. Many customers are
minimising their inventories, ahead of the year-end. The decrease in
activity appears to be a symptom of seasonality and a fall in
consumption, especially by the auto sector. Steelmakers are not
fully booked, with short-term availability for standard grades.
Pressure exists from third country imports from sources in Turkey
Activity on the French market is, generally, at a good level, in
December, although strip mill product prices remain under slight
downward pressure. Negotiations for annual and half-year contracts
with OEMs are still underway. In the general market, selling figures
declined further, in December.
The downturn in the Italian manufacturing sector continued, in
November. The political problems between the Italian government and
the EU are negatively affecting investment. This is reflected in the
steel business, with buyers lacking the confidence to place forward
orders. Prices continue to trend downwards. Companies are destocking
for the year-end and adopting a ‘wait and see’ attitude as they
anticipate further price erosion in the near-term. Distributors’
resale margins are extremely low as end-users insist on discounts.
Strong import pressure is noted, from Turkey, South Korea and
Basis values steadied, in the UK, in December, after falling, in the
previous month. Demand is low, for seasonal reasons. Moreover, the
country’s impending EU exit is causing great concern in business
circles. Companies are destocking. Service centres supplying the
auto market are suffering because of a lack of orders from that
sector. Overall, distributors are managing to maintain their resale
Belgian strip mill product values remain under negative pressure, in
December. Inventories are sufficient for today’s needs, so buyers
are only purchasing replacement material, on a month-by-month basis.
European suppliers still claim increases for the first trimester of
2019. Imports are available at competitive rates. Service centres
report slightly reduced sales volumes. Competition between
distributors is fierce.
Spain’s manufacturing sector strengthened again during November. In
the steel market, EU producers continued to adjust basis values
downwards, for January 2019 deliveries. The move was driven by the
continuing decline in import prices for shipments into the early
part of next year. Demand has slowed over the last two months. The
decrease is primarily apparent in the auto sector. Many service
centres have sufficient material, either in stock or already on
order, as they expected better sales.
Source: MEPS -
European Steel Review
- December 2018 Issue
Also See: MEPS
All Products Composite Purchasing Price & Index
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