REDUCED IMPORT THREAT
PROVIDES BOOST FOR EU COATED COIL PRICES
Coated coil basis values continued to
escalate, in March, driven by restricted availability of imports and
extremely extended delivery lead times from European mills. However,
the pace of increases for the other strip mill products slowed and,
in parts of Europe, prices stabilised.
Third country imports, from sources not affected by antidumping
measures, are becoming more interesting to steel buyers - with offer
prices lower than those sought by domestic steelmakers. Furthermore,
delivery lead times from outside the EU compare quite favourably
with domestic ones, at present. Nonetheless, local producers
continue to target further price advances, particularly on coated
German steel demand is firm. Service centres purchased substantial
quantities of material in advance of the recent price hikes and
inventories are now higher than in December 2016. Nevertheless, they
can, comfortably, pass on mill increases to their customers.
Steelmakers continue to push for further rises but the upward
momentum on hot and cold rolled coil values appears to have stalled,
for the moment.
Activity in the French market slowed, in February, due to school
holidays, but is expected to pick up during the course of March. The
price trend is still positive, on the whole, with mills continuing
to seek increases. Market participants expect the upward tendency to
continue. However, distributors are reported to be quite
well-stocked or awaiting deliveries of orders already placed.
The significant price hikes anticipated by Italian buyers, last
month, have not been realised. Having purchased large quantities
during December and January, a number of service centres were
destocking, in February. Inventories are sufficient to cover their
requirements for the first half of the year.
In the UK, steel demand is robust. Basis figures continued to climb
for May deliveries. Buyers anticipate further hikes on coated
products. Distributors’ sales are good, with resale values
continuing to strengthen, although a number of service centres are
unable to lift them quickly enough to retain profit margins.
Inventory levels are normal-to-high.
Belgian suppliers continue to target an increase in basis figures
for strip mill products. However, few changes were noted, with the
exception of hot dipped galvanised numbers, which are driven up by
the cost of zinc. Mill delivery lead times stretch to the end of the
second trimester and beyond. As distributors have plenty of material
on stock, they are able to postpone any purchases at the current
higher prices. Customers are now showing interest in third country
imports. They cite these cheaper alternatives as a bargaining tool
when negotiating with domestic steelmakers.
Underlying steel demand remains solid, in Spain. However, many steel
users and distributors are well stocked, having purchased large
volumes of overseas material around the turn of last year.
Consequently, they do not need to re-order from domestic suppliers,
at present. New import offers are attractively priced and have
favourable delivery lead times when compared with European ones.
This availability prevented local steelmakers from imposing further
increases on hot and cold rolled coil prices during recent
negotiations. Distributors still encounter difficulties when
attempting to pass on mill hikes to the marketplace.
Source: MEPS -
European Steel Review
- March 2017 Issue
MEPS - EU Steel
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