Building DK Building SE Electronics DK Energy DK Food DK Food SE Metal Metal DK Metal NO Metal SE Retail DK Wood DK
 

Tight supply and stock replenishment push EU steel prices higher

- By Charlotte Stubben

Negotiated basis prices for flat products are higher this month than those reported by MEPS (International) Ltd. in January, as buyers replenish stocks.

The mills are keen to offset the losses they incurred in the last two months of 2011. Consequently, they are psychologically preparing customers for further hikes for April production.

However, as much as the steelmakers would like to continue to lift prices, they also want to keep imports at bay. At present, import activity is low but, if the euro continues to strengthen against the US dollar, there could soon be competition from third country sources.

Read more: Meps: Weak market conditions keep Meps - EU average steel prices stable

On a more positive note for the producers, the current exchange rate has been providing new export opportunities.

German customers
Most German customers have placed their orders for the first quarter at values above those quoted by MEPS (International) Ltd. in January. Target prices for the second trimester have not been fully released yet but it is expected that the mills will press for increases rather than consolidate the current figures. Growth in real consumption is only small.

However, supply has tightened significantly, due to the recent reductions in capacity. End-users, in general, are still just buying their regular quantities but there has been some speculative purchasing by a number of service centres, so stocks are expanding.

French distributors
French distributors are continuing to place orders following the mills’ ongoing price escalation. Inventories are on a low/medium level, with restocking still in progress this month. Meanwhile, real demand is deemed satisfactory, with the exception of the auto industry, which is considered to be weak. Market participants question whether activity will be high enough to carry the current price momentum through the middle of the second quarter, as hoped by the producers.

The Italian mills
The Italian mills are pushing hard to restore their profit margins. They have imposed a number of increases and are now proposing further hikes. There has been an improvement in activity but this is linked to restocking rather than real consumption. Distributors’ purchasing is constrained by poor end-user demand and a lack of liquidity.

Mill order intake in the UK
A degree of inventory replenishment has helped to boost mill order intake in the UK. This is reflected in the higher basis values that have been agreed during recent settlements for the first quarter, which is now closed. Domestic capacity has been aligned down to match the current low demand and third country import offers are few and far between. Distributors are still struggling to realise decent profit margins but resale values have picked up recently, although they are often still lagging the mill increases.

Spanish demand
Spanish apparent demand has recovered somewhat in recent weeks as companies replenish stocks ahead of escalating basis values but underlying consumption continues to show severe weakness. Limitations on finance have become even worse and are reaching a critical level. Service centres are keeping stocks under strict control. Their poor sales mean that they are only managing to pass on a small proportion of the recent mill price advances to their customers.

Write Comment
Sign up for our newsletter
Already 2 subscribers.
View the latest newsletter.
Follow us on:

See allNews from the companies

Domnick Hunter campaign

December 17, 2014 12:00 AM
ultrafilter Skandinavien ApS

Buy replacement elements for your Domnick Hunter filter from Ultrafilter Scandinavia and save money.

Thank you for a fantastic 2014!

December 16, 2014 10:11 AM
AP&T

For AP&T, 2014 has been characterized by both the past and the present. We celebrated 50 years since the foundation for AP&T was laid and the 25th ann ...

Merry Christmas and a Happy New Year!

December 16, 2014 10:49 AM
TAON HYDRAULIC, Hydraulic Systems and Components

TAON Hydraulik wishes customers, partners and suppliers a very Merry Christmas and a happy and prosperous New Year. We thank you for the past year ...

December 9, 2014
December 5, 2014
December 3, 2014
December 1, 2014
November 28, 2014
November 27, 2014
November 26, 2014
November 25, 2014
November 24, 2014