European strip mill product prices continued to erode, in December. Domestic steelmakers are prepared to offer concessions in order to secure production volumes. Despite the tendency of most steel mills to try to increase basis values, the reality is that they are struggling to hold on to current figures. Material, in the general market, is plentiful. This is partly due to the significant reduction in demand from the auto sector. Mill delivery lead times continue to contract. Competitively priced imports are available.
Meanwhile, customers are reluctant to book forward orders, expecting further downward price movements. They are beset with uncertainties. These include the lowering of European manufacturing output, the EC safeguard quota system, political problems in Europe and other parts of the world, plus the threat that tariffs may be imposed on car sales to the USA. Moreover, inventories, particularly at the service centres, are, currently, sufficient. This enables buyers to postpone purchasing decisions until the future pricing trend becomes more clear.
The German manufacturing sector lost further momentum, in November. Strip mill product prices declined in December, owing to reduced demand, from all steel-consuming sectors. Many customers are minimising their inventories, ahead of the year-end. The decrease in activity appears to be a symptom of seasonality and a fall in consumption, especially by the auto sector. Steelmakers are not fully booked, with short-term availability for standard grades. Pressure exists from third country imports from sources in Turkey and Asia.
Activity on the French market is, generally, at a good level, in December, although strip mill product prices remain under slight downward pressure. Negotiations for annual and half-year contracts with OEMs are still underway. In the general market, selling figures declined further, in December.
The downturn in the Italian manufacturing sector continued, in November. The political problems between the Italian government and the EU are negatively affecting investment. This is reflected in the steel business, with buyers lacking the confidence to place forward orders. Prices continue to trend downwards. Companies are destocking for the year-end and adopting a ‘wait and see’ attitude as they anticipate further price erosion in the near-term. Distributors’ resale margins are extremely low as end-users insist on discounts. Strong import pressure is noted, from Turkey, South Korea and Russia.
Basis values steadied, in the UK, in December, after falling, in the previous month. Demand is low, for seasonal reasons. Moreover, the country’s impending EU exit is causing great concern in business circles. Companies are destocking. Service centres supplying the auto market are suffering because of a lack of orders from that sector. Overall, distributors are managing to maintain their resale margins.
Belgian strip mill product values remain under negative pressure, in December. Inventories are sufficient for today’s needs, so buyers are only purchasing replacement material, on a month-by-month basis. European suppliers still claim increases for the first trimester of 2019. Imports are available at competitive rates. Service centres report slightly reduced sales volumes. Competition between distributors is fierce.
Spain’s manufacturing sector strengthened again during November. In the steel market, EU producers continued to adjust basis values downwards, for January 2019 deliveries. The move was driven by the continuing decline in import prices for shipments into the early part of next year. Demand has slowed over the last two months. The decrease is primarily apparent in the auto sector. Many service centres have sufficient material, either in stock or already on order, as they expected better sales.