EU Steel Market Prices

EU Steel Market Prices and Demand Stabilise as Year-end Approaches

Strip mill product basis prices were relatively stable, in most European markets, according to the November edition of MEPS European Steel Review. Major mills continue to promote further increases, with little response from buyers. However, steelmakers remain confident that modest rises can be implemented early in 2018. Distributors, although working through their overblown inventories quite successfully, are under no pressure to purchase immediately. Nevertheless, availability has tightened as a result of trade measures. This, together with firm underlying consumption, continues to support the producers’ proposals.

The manufacturing sector, in Germany, continued to grow strongly at the start of the fourth quarter. Steel consumption remains robust, with both auto and construction companies requiring considerable quantities. Import volumes are restricted to, mainly, small tonnages. Despite this lack of competitive overseas opportunities, buyers relate that availability from domestic sources is adequate for their needs. Basis values were largely unchanged, in November, still failing to reach the targets set by local mills.

French prices remain relatively stable. Demand is quite good, although few orders were booked, in October. Buyers were expecting prices to decline but, as this was not the case, they have now resumed purchasing. Although the mills continue to propose increases, customers anticipate no changes up to the year-end.

Most fourth quarter deals are now finalised, in Italy, at similar values to those recorded last month. A degree of uncertainty surrounds the forward pricing scene. Buyers are waiting before committing to large volume orders. In fact, several major service centres are still destocking for the year-end. New import deals are virtually at zero. Quotations from Turkey, India and Vietnam are close to European levels.

Although the UK market is quiet, some service centres report increased activity levels, in early November. The outlook for the manufacturing sector remains positive but auto output is slowing and construction activity has fallen sharply. Resale margins, at the distributors, continue to be problematic as old, cheaper priced stock is still working though the supply chain. Producers, noting a decline in recent transaction volumes, are slow to issue target prices for the first trimester 2018.

Belgian demand is robust, although sales tonnages are shrinking, in view of the need to cut inventory levels before the end of the year. Strip mill product basis values are stable, for the moment. Suppliers are proposing small increases for January 2018 production. However, distributors do not believe that present demand can justify the imposition of further hikes. They are already struggling with their resale margins. Third country imports are no longer attractively priced.

The Spanish manufacturing sector gained further growth momentum, in October. Demand for strip mill products is stable. Basis values remained steady, in November. Orders, for the local mills, are unlikely to improve, to any great extent, in the near term. Large quantities of imported material, especially cold rolled and galvanised coil, ordered when overseas prices were very competitive, are still arriving. New import quotations recovered, this month. Service centre activity is fairly slow.

Source: MEPS – European Steel Review – November 2017 Issue