UNITED KINGDOM June 23 2014 5:15 PM LONDON (SCRAP REGISTER): Steel market participants in Scandinavia reported good levels of business activity in recent weeks. However, sales volumes in these countries are not sufficient to outweigh the disappointing situation in the wider region of Western Europe. Raw material costs are low, demand across the continent as a whole is flat and the mills continue to operate at significantly less than their maximum capacities. As a result, prices are under negative pressure and average transaction values for most products have slipped, this month.

Consumption of strip mill products is fair but suppliers are meeting strong opposition in their efforts to lift prices. Offers from Russian sellers are not sufficiently cheap to be attractive, given the longer delivery lead times. The distribution arms of SSAB and Rautaruukki continue to compete for market share, prior to their proposed merger. This is keeping selling values low in Sweden and Finland. Large cold rolled coil customers are now negotiating contracts for the third quarter. The mills are unlikely to achieve better than rollover figures. The market for hot rolled coil is particularly flat and prices have fallen by more than those for the cold rolled product, in several countries. Processors of galvanised material continue to receive healthy order volumes from car manufacturers in the north and west of Europe.

Overcapacity at European mills and competition between stockists are limiting the profitability of producing and trading steel, despite improving economic indicators. The truck maker, Scania, is buying substantial volumes of plate, in Sweden. Demand from the construction sector is increasing, in some countries. The potential for price inflation is restricted by import offers from Eastern Europe.

In Sweden, demand for structural sections has held up well through the mild winter. However, demand is weak, in many countries, and there is stiff competition between sellers. As a result, ex-mill prices are down and distributors, too, must cut their transaction figures in order to secure sales. Demand for rebar is quite strong in Sweden. This is mainly driven by infrastructure schemes in the Stockholm area. On the other hand, government investment in new projects is at a low level, in most of Europe, and sales tonnages are decreasing slightly as the summer draws near. Although demand for merchant bar, from the manufacturing sector, has picked up in the last three months, there is plenty of material available and delivery lead times are short. Prices have softened, in June.