German consumption of strip mill products is healthy. Availability of commodity grade material is good. The steelmakers are trying to implement a rise of €20/30 per tonne in the general market, for October deliveries. Currently, service centres are well booked for third trimester business, but resale margins remain under negative pressure. Third country import offers show little price advantage against domestically produced steel.
In France, distributors supplying the auto industry continue to indicate very strong sales. Supply difficulties were reported, with some delivery problems regarding material sourced in the Netherlands and Germany. Spot values were stable or slightly down, in July. The steelmakers’ announcements, to raise figures by €20 per tonne, met with a large degree of resistance. Service centres are not willing to order at increased prices, considering the level of their resale values and competition in that sector from mill-owned distributors.
Growth in Italy’s manufacturing sector improved, during June. However, general market sentiment has softened. Nevertheless, the recent price erosion was halted, in July, with the price trend reverting to a positive one, albeit from a very low base. All local/regional mills raised list prices, in tandem, as slab costs escalated. Inventory levels were reduced, prompting buyers to make stock purchases. Supply uncertainty exists due to the EC safeguard investigation. Moreover, the majority of mills will, shortly, be undertaking scheduled summer maintenance. Buyers anticipate further hikes, after the holidays, in September. However, resale margins at the service centres remain poor.
The performance of the UK manufacturing sector remained relatively subdued, in June. Nevertheless, a number of steel stockholders reported good levels of activity and quite strong demand. Their resale prices continue to recover but are still not at the required level. Independent distributors continue to complain that mill-owned service centres are selling aggressively, thus lowering customers’ price expectations. Trader stock levels have dwindled as they are unwilling to take the risk that retrospective duties may be applied. Basis values, quoted by steelmakers, are similar to those reported, in June. Delivery lead times are extending into October.
Strip mill product basis prices remained stable, in Belgium, in July. Sellers would like to impose a rise but the onset of the Belgian holidays, in mid-July, have, so far, enabled buyers to postpone purchasing decisions. Distributors’ resale values, which were reflecting steel costs, recently weakened, as end-users refused to pay more. Inventory levels are normal to low. Customers complain of delayed deliveries from the steelmakers.
Spanish manufacturing business conditions continued to improve, at the end of the second quarter 2018. However, the rate of growth in the sector remained muted, compared with earlier in the year. Nevertheless, distributors report a relatively quiet market. Despite the mills’ announcements of a €20 per tonne rise, strip mill product figures were stable, in July. Currently, import offers are uncompetitive. Buyers anticipate that domestic price increases will be secured, once negotiations are concluded.
Source: MEPS European Steel Review