Flat product price weakness persists in both the north and south of Europe, according to MEPS. Spot business is slow amidst a reluctance to commit to forward transactions for third quarter business. Inventories at distributors and OEMs remain relatively high. Large volume orders were placed at the turn of the year, in anticipation of price rises. The material has now been delivered or, in some instances, is still arriving, inflating already bloated stocks. Import offers are competitively priced. Quotations by overseas suppliers are made more attractive by the strength of the euro against the US dollar.
The supply situation has eased, for most strip mill products, in Germany. Underlying steel consumption is robust, despite the approach of the summer holiday season. Nevertheless, due to high inventories, particularly at the service centres, buyers are very careful when placing forward orders. Standard grades and sizes are on offer from suppliers in India, Taiwan, Vietnam, South Korea and Russia. Quotations are at more competitive prices than in May because of the weak US dollar exchange rate. The domestic price trend is negative.
After a good first quarter, French distributors report slightly softer conditions in the second trimester. Prices continue to be under negative pressure. Supply chain participants are hopeful that business will start to pick up in the short term. End-users are beginning to refill their order books, as a number of projects receive approval. Large buyers have started to purchase material, anticipating mill closures in August.
Growth in Italian manufacturing output slowed slightly, in May. Steel demand is stagnant and the market remains fragile. The only sectors performing well are automotive and mechanical engineering. MEPS notes that third country imports from India, Turkey, Vietnam and China are widely available at attractive prices. At the moment, stocks are plentiful at distributors and end-users, causing customers to purchase only to fill any gaps in inventories. Re-ordering for the autumn is unlikely to take place until just before the August holidays commence. Customers are demanding discounts, leading to depressed resale values and poor profit margins for the service centres. Ex-works strip mill product figures continue to contract.
In the UK, the weakness of the pound sterling is helping exporters of manufactured goods, although new investment is hindered by the upcoming Brexit negotiations. A number of negative price corrections were noted for strip mill product sales, in June. As resale values at the service centres weaken, buyers are, once again, considering the purchase of overseas material, particularly from suppliers in India and Vietnam. Currently, this is much cheaper than the European equivalent, partly because of exchange rate movements. Demand on distributors remains reasonable, although the market has become quiet over the last few weeks. Inventories are at a higher level than normal. Resale values are under downward pressure as a number of distributors liquidate stocks, accumulated when prices were much lower than today.
Despite reluctance on the part of European sellers, negative price movement continues in the Belgian market for third quarter deliveries. Demand on the service centres improved, recently, but remains modest. Stocks are plentiful, enabling buyers to postpone major purchasing decisions, for now. They only order the small quantities that they need before the approaching holiday month of July.
Import offer prices into Spain decreased when the US dollar weakened. So far, few deals have been concluded as buyers anticipate more concessions, in the future. Moreover, the market is overstocked. Service centres will need new material for September/October, after the holidays. European suppliers are slashing their quotations accordingly, as order intake slows. Despite satisfactory levels of real consumption from a growing manufacturing sector, end-users continue to ask distributors for discounts. Service centres complain that resale values are falling more quickly than mill prices.
Source: Hellenicshippingnews.com
