MODEST DEMAND AND LOW INPUT COSTS KEEP EU STEEL PRICES IN CHECK
Slow purchasing activity over
the last month has not supported the European mills’ desire to lift
basis values for flat products. However, domestic steelmakers have
reasonably good order books, thanks to improved export business on
the back of a weak euro. Moreover, Ilva has been out of the market.
Furthermore, a number of mills have been carrying out planned
maintenance and/or have had production problems. All these factors
led to a tightening of supply.
Third country offers from the Far East, which have been largely
ignored because of their long delivery lead times, are still
competitively priced, despite the devaluation of the euro against
the US dollar. As European mill lead times extend, a number of
buyers, especially in Southern Europe, are becoming more interested
in imports. Russian material is also popular, given the fall in
value of the rouble.
German customers report that the larger steelmakers are still
talking of a €10 per tonne advance for second quarter business but
buyers expect to pay comparable prices to those in period one.
Offers from China are at similar levels to European ones. Demand
from end-users is similar to that in 2014.
Activity remains generally weak in the French market, with
end-users’ order books shrinking marginally this month. Distributors
are competing against each other in a price war. The mills do not
seem able to lift their strip product values. The disruption in
deliveries, at the beginning of last month, caused by the situation
at Ilva, led to a very limited price correction, if any.
Despite a cut in volumes from domestic steelmaker, Ilva, Italian
prices have failed to recover. The market, generally, is dull.
Demand is improving, albeit only slightly and from a low point.
There is still uncertainty surrounding the Ilva situation but normal
activity is slowly resuming. There is stronger pressure from
imports, especially Chinese and Russian material. Competition in the
distribution sector is severe.
In the UK, service centres were busy in February and March started
well. Their profit margins are down a little because of falling mill
prices. The tumble is almost entirely due to currency movements,
which have enabled mainland European producers to offer more cheaply
in the UK. Domestic mills have not yet declared their targets for
May/June. Chinese suppliers are offering at £20/30 per tonne below
current local values, for August arrival. Stocks of foreign material
at the ports have gone down.
The Belgian market is relatively stable with little movement in
either prices or demand. The mills are still claiming an increase of
€10/15 per tonne. In some instances they have succeeded but,
generally, basis numbers remain unchanged. While raw material costs
remain low, they have no major reason to justify a rise. The euro is
weak, helping to keep most third country imports at bay, for now,
but the rouble is even weaker, encouraging a great many cheap offers
from Russian suppliers. Competition in the distribution sector is
Spanish customers have agreed to pay slightly more for some strip
mill products during recent negotiations as delivery lead times
lengthen. In general, demand is at a similar level to that in late
2014, or even a little better. However, resale prices remain under
extreme negative pressure.
European Steel Review
- March Issue
MEPS - EU Steel
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