EU STEEL PRICES DECREASE AS IMPORT THREAT INTENSIFIES - MEPS
EU domestic flat product selling values continued to decline, in
October, driven down by low import quotations and decreasing raw
material costs. Moreover, the differential between offers from
suppliers in the north and south of Europe is too vast to be
sustainable for any length of time. Activity remains subdued and
buyers, believing that further price cuts are inevitable, are
purchasing very cautiously.
German customers complain that, since the return from the summer
holidays, business levels are not as good as expected. Volumes are
below those seen in June. Service centres report that order intake
is tepid. Since their inventories are quite high, they have started
to destock, which is likely to depress prices even more. There are
fears that the situation at VW could have a negative effect on car
sales, thus impacting the German economy.
In France, buyers have adopted a ‘wait and see’ position. Many gaps
in inventories were filled in September. Consequently, orders in
October are very slow to materialise. Producers, having failed to
resist negative price pressure, have cut their selling values, as
they try to compete with increasingly lower third country offers.
Quantities, booked recently, are expected to arrive in the French
market by the end of the year.
In Italy, domestic prices have been aligned to those of imports from
numerous sources. Moreover, quotations from foreign sources are
constantly decreasing. Buyers are waiting until the last moment to
conclude orders, as they anticipate further downward movements. Real
consumption is improving slowly, sustained by a busy auto sector and
recovery in the mechanical engineering industry.
In the UK, stockholders note that demand, although still quite good,
has contracted slightly from its recent peak in the first few months
of 2015. Resale selling values are falling in tandem with mill
decreases but with a small time lag, in most instances. Although
imports are on offer, the majority of non-UK orders are being placed
with continental European suppliers. Nevertheless, third country
prices are influencing domestic basis values, which have weakened
again, this month.
Producers supplying the Belgian market continue to revise selling
values downwards as import pressure persists and input costs remain
low. The large mills are no longer trying for price hikes. They
would be satisfied to roll over current levels for quarterly and
half-yearly contracts. Underlying demand has not changed but
end-users buy only what they need for immediate requirements,
knowing that delivery lead times are short and material is likely to
be cheaper at a later date.
Spanish consumption is stable. However, service centres have begun
to destock ahead of the financial year-end. Since our last report,
third country import price offers have undergone a sharp downward
movement, leading to further domestic basis price reductions on all
flat products, for December. As there is still a large differential
between local and foreign figures, buyers envisage further
discounting for January/February business.
Source: MEPS -
European Steel Review
- October 2015 Issue
MEPS - EU Steel
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