Damstahl: Weak and sluggish markets in Germany and the UK

Germany:
Market for stainless steel flat products commodities has weakened, whilst the order intake for long products remains unchanged on a satisfactory level.

Stock levels in the supply chain are still comparatively low in Germany but not seen as critical for cold rolled flat products (~60 days). Some distributors will most likely try to reduce stocks even further until year end.

Damstahl Germany remains cautiously optimistic about the market development over the next months. Negative news about Eurozone debt crisis did not have an impact on sales so far. The book ‘Stainless Steel and Corrosion’ by Claus Qvist Jessen is available now also in German (please contact Damstahl Germany).

As the sentiment in the German economy worsens, macroeconomic news do not (yet) justify this. Germany’s GDP unexpectedly grew by 0.5% qoq in Q3/11 (seasonally adjusted). But, a rather stagnant Q4/11 is expected.

Dwellings permissions increased by 22% from January to September this year (yoy) to 167,000 flats. This indicates a substantial improvement of the residential building sector which goes strong into 2012.

Machinery and Process Industry stagnates as order intake grew by only 1% compared to September 2010; Domestic orders declined whilst orders for export were up (+3%). The overall order intake was above expectations.

United Kingdom:
The stainless steel market is sluggish affected by the uncertainty about the Ni price. A further slowdown is expected during December with the exception food processing and catering.

Despite a 0.5% GDP growth in Q3/11 (yoy), production output in the UK has weakened in most months of 2011 until August. In Q4/11, a further weakening of UK manufacturing output is expected. Construction has continued to soften in recent months (yoy: -4% in August). Despite the weak market, new housing construction has grown 3% in Q2/11 (yoy) whilst commercial and public building activity remained again flat.

High inflation rates have a negative impact on consumer good sales in the UK: Consumer prices were up 5.2% in September after 4.5% in the previous month. The September rate was one of the highest since the early 1990s.