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News Release from: MEPS (International)
Edited by the Manufacturingtalk Editorial
Team on 16 November 2007
EU Steel prices should recover In 2008
EU flat products producers are reported to be more optimistic for the first quarter of 2008 and hope that escalating raw material costs will help to boost market prices.
EU flat products producers are more optimistic for the first quarter of next year, hoping that escalating raw material costs will help to boost market prices Underlying demand appears to remain quite strong
This article was originally published on Manufacturingtalk on 9 Oct 2006 at 8.00am (UK)
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In Germany, producers are reported to be carrying large amounts of 'over rolled' material that they are selling quite cheaply.
Consequently, many buyers are purchasing this instead of placing forward orders.
Moreover, there is still a massive overhang of stock at service centres and end-users.
Resale values for slit strip are very poor as the processors fight for orders.
A first quarter mill price advance will prove difficult to impose.
* France - basis prices are still under pressure in the French market but decreases are not as significant as last month.
The mills are aiming to lift values at the beginning of next year.
Currently there is a large gap between their expectations and what buyers are ready to accept.
Distributors are very cautious and are reluctant to start ordering for the first trimester.
Stocks are fairly high.
Under present conditions the auto industry is seen as the only positive market.
* Italy - Italian activity levels have slowed considerably in the last two months.
Riva has reacted to this by reducing basis prices.
The cuts are in the region of EUR 20/30/tonne.
Demand is low because customers are working through inventories that have been swollen by the late arrival of large quantities of foreign material.
Stocks may not be cleared by the start of 2008.
Pressure from import competition for new orders has declined.
* UK - this time of year is traditionally a period of strong demand from end users in the UK.
However, at present, activity levels are quite subdued.
Buyers are not rushing to book tonnage, despite indications from the mills that price increases are imminent in January.
Customers believe that no price advances will be secured until at least the second half of period one because of a lack of demand to support them.
At the start of 2008, there will still be a hangover of stock from fourth quarter imports which are currently standing at West coast ports.
* Belgium - in Belgium, recent negotiations for late fourth quarter business have resulted in further small price cuts.
However, some customers feel that the bottom may have been reached, although they intend to resist increases in the first quarter.
The port of Antwerp is still full of steel from old orders.
Service centres continue to destock as they want low inventories by the year end.
Demand on distributors is quite healthy.
* Spain - sales activity is flat in Spain.
Service centre stocks are coming down with many now standing at 2.5/3.0 months supply.
We have reports that shortages of certain products are starting to develop.
Therefore, distributors should start to reorder before the end of the year.
This will be good news for the mills who would like to be able to charge higher prices in period one 2008.
* German steel price Forecasts for hot rolled coil - MEps forecasted that the 2007 German hot rolled Coil average price will be 10% above the 2006 figure.
This will be a new 'record high' and the first time the annual value will top EUR 500/tonne.
During 2008 the figure is predicted by MEPS to move up another 2.5% to exceed EUR 520/tonne.
The quarterly average hot rolled coil transaction value for fourth quarter business is expected to drop by 4% compared to the previous period.
Negative pressure set in due to weak demand and excessive inventories.
Consequently, customers delayed purchasing, forcing mills to reduce prices to generate orders.
Imports continue to arrive, which is depressing the market further.
German mills are likely to push for rises ahead of the implementation of the new iron ore contract in April 2008 but these are not expected to take hold initially due to reduced demand.
Customers are forecast to begin restocking during the first quarter of next year.
This should support transaction price advances through the second and third trimesters.
However, as a result of continued import pressure and a weaker economic climate, these increases could be only modest.
A seasonal downturn is anticipated in the final period as year end de-stocking reduces buying activity - thus causing prices to fall.
* Source - MEPS European Steel Review.
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