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EU Steel market prices under pressure in June so far: MEPS
Jun 20,2014 15:06CST
industry news
Activity in the European flat products sector is unseasonally quiet in June so far.

UNITED KINGDOM June 20 2014 9:15 AM

LONDON (Scrap Register): Activity in the European flat products sector is unseasonally quiet in June so far. Although underlying demand is slowly recovering in several countries, it remains a buyers’ market, said MEPS International in a research note.

According to MEPS, mills have reported heavier order intake lately, as consumption strengthens but supply is still in surplus and delivery lead times quite short. Third country import prices are falling as iron ore costs move down. The reduction in outlay on raw materials is also undermining domestic basis values.
Material can be delivered quite quickly in Germany. Mills are competing strongly for orders. Consequently, the proposed price rise appears to have been put on hold, although producers are not saying this officially. In fact, MEPS has noted some downward movements. Distributors, keen to manage their stocks, are only purchasing when they know they already have orders to fulfil.
News of the French economy is disappointing as manufacturing output fell in April. The steelmakers are looking for rises, offering material at higher prices. However, in reality, when a deal is made and steel is ordered, prices are at the same level as a month ago.
MEPS research showed no recent price improvements in the Italian market even though the producers are pushing hard for increases. Demand is static and, with the summer holidays approaching, companies are already destocking. Customers are waiting until the last possible moment if they need to buy. Delivery lead times are very short because supplying mills are not fully booked. If anything, the economy is likely to slow in July for seasonal reasons.
Although there is more confidence and optimism in the UK flat products market, some prices continue to drift, partly due to the strength of sterling which is encouraging cheaper imports from mainland Europe and further afield.
In Belgium, end-user demand is slower than was predicted at the start of the year. Both they and the distributors are keeping stocks to a minimum. Service centre resale values have been under pressure for several months, creating financial problems for some companies. Steelmakers have stopped trying to lift basis numbers and market players can envisage no movement before the holidays in July and August.
The business climate in Spain is improving, albeit from a low point. More credit is available from the banking sector and the government has provided some tax relief for companies. Steel demand is slowly reviving.

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