European Steel Buyers
Slow To Accept Mill Price Hikes
mill product prices stabilised, in early December. In Italy, basis
values moved up a little. Despite a background of slow economic
growth, global trade conflicts and political difficulties, a small
recovery in market sentiment was noted. Nonetheless, activity levels
in the steel market remain relatively low. Uncertainty, surrounding
the potential closure of Italy’s Ilva plant, has already resulted in
mills, elsewhere, indicating an increase in order intake. European
steelmakers notified customers of proposed price rises of €30/40 per
Although a lack of orders, from the auto sector, in particular,
continues to have a significantly negative effect on overall demand,
MEPS detects tentative signs of inventory replenishment, at the same
time as the steel producers are reducing capacity. Moreover, mills,
globally, are lifting their price offers, leaving European buyers
with fewer alternative sources of supply.
Attempts to raise strip mill product prices were noted in the German
market, but, so far, these have only served to stabilise basis
figures at the level reported last month. However, confidence is
improving, regarding consumption and sales volumes. Nevertheless,
buyers believe that a number of domestic mills are still looking to
recover shortfalls in their production schedules - mainly due to the
significantly reduced activity in the automotive and machinery
manufacturing industries. Moreover, eastern European suppliers
continue to sell quite aggressively.
Most market participants, in France, continue to describe current
activity as satisfactory. One exception is the auto sector. The
steelmakers’ attempts to lift basis values appear to have provided
some impetus to order intake. Large service centres started to make
enquiries in early December but small/medium firms remain hesitant
to place new orders. Prices reached the bottom, in November, but no
significant increases are noted, so far. This may be because not all
suppliers are quoting price rises, at present.
In Italy, strip mill product prices continued to fall, following
MEPS’ November research. However, the uncertainty surrounding
supplies from Ilva eventually led to price stabilisation and, in
fact, a small recovery is now noted. Purchasing activity improved,
fuelled by the Ilva issue and a rise in scrap costs. Nevertheless,
demand is still below expectations. Service centre sales tonnages
are lower than those recorded one year ago. Small companies continue
to buy on a ‘hand-to-mouth’ basis. Resale margins are
Steel demand, in the UK, is negatively affected by a slump in auto
production and continued uncertainty related to the country’s exit
from the EU. A further reduction in manufacturing output was noted,
in November. Although tabled prices for strip mill products are
stable, this month, steelmakers are now demanding increases of
£40/50 per tonne. Many service centres had already completed their
deals for the first quarter of 2020, before the price hike was
announced. Distributors report low sales volumes, at present. Credit
limits have tightened. Profit margins are being squeezed.
In Belgium, basis values for several strip mill products continued
to decline, in November, following MEPS’ research, before moving
back up to their previous levels. Customers believe that the bottom
has been reached and expect prices to recover, in January.
Confidence is returning. However, buyers still purchase prudently.
Import quotations are also higher than of late. Large service
centres are keen to make sales, in order to reduce inventories,
before the year-end. Intense competition in the distribution sector
led to further discounting.
Spanish demand for strip mill products is, currently, stable.
However, political uncertainty confuses the outlook for 2020. This
serves to adversely affect investment decisions. Distributors report
reasonable sales volumes but with low profit margins. Destocking is
still underway as the year-end approaches. At present, service
centres are reluctant to re-order but purchasing will recommence, in
January/February. Meanwhile, the recent downward movement in basis
values halted, in December. Steelmakers are proposing a hike of
€15/20 per tonne, for February deliveries. Deals for
December/January were booked at unchanged prices. Third country
import quotations gained around €40 per tonne, in the last two/three
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