EU steel coil prices moved upwards, during late July, as customers booked tonnage to replenish stocks for supply after the summer vacation. The increases, in Northern Europe, were quite modest, whereas they were more pronounced in Italy and Spain.

Market Activity Resumes Following European Holidays

The market was relatively quiet during August, due to the prolonged summer holiday period. Activity remains subdued, in early September. As delivery lead times at the EU steel mills are quite extended, buyers are considering placing orders for supply in December 2018/January 2019. They are approaching these discussions against a backdrop of price rise announcements from the steelmakers. MEPS notes resistance to this new initiative, particularly from service centres, due to their inability to fully pass on previous increases to their customers. As current inventories are at a high level, the majority of buyers are delaying order placement. Quite high volumes of imported material, purchased earlier in the year, are expected to arrive over the next two months. Underlying demand, overall, is healthy.

Germany

German consumption of strip mill products remains buoyant. Order intake at the domestic mills is higher than normal for the fourth quarter. A modest price rise was implemented at the end of July. The steelmakers continue to try to secure further increases. Third country import offers show little, or no, price advantage over domestically produced steel.

France

As EU steel mills are pushing for more hikes, the price trend is generally upwards in the French market. Increases are limited, for now, but buyers anticipate that they will be forced to pay more for strip mill products in the fourth trimester. Activity was slow to resume at the beginning of September. However, expectations are that it will pick up to the levels of before the holidays, in the coming weeks.

Italy

In Italy, the price upturn, reported in July, extended into September. Local and regional mills continue to lift list prices for forward deals. Their order books are strong. However, service centres report difficulty selling to their customers at the current high figures because most end-user sectors are performing poorly. Moreover, distributors have relatively high inventories so are in no hurry to replenish their stock levels.

United Kingdom

A number of UK service centres reported busier than normal activity in August. However, although their resale prices continue to recover, they are not at the required level. Basis values, quoted by EU steel producers, are above those reported, in July, for delivery in October/November. Buyers believe that the producers will demand another £20 per tonne for December/January business. For a brief period, during the summer, favourable currency exchange rates led to attractive deals being concluded with Turkish suppliers.

Belgium

Strip mill product basis values strengthened, in Belgium, in September. Steelmakers wish to boost prices by a further €20 per tonne, in the near future. They claim a lack of raw materials and limited imports, due to political and economic uncertainty. Service centres note low levels of activity since the summer holidays. Their resale values are difficult to maintain as end-users refuse to pay more. Overcapacity in the distribution sector, together with low demand, has resulted in downward pressure.

Spain

In Spain, domestic steelmakers secured increases of around €20 per tonne for November deliveries. This was due to the uncertainty of the safeguard measures and the expected replenishment of inventories, following the extended summer vacation. Buyers are faced with the prospect of a further rise for December business. However, high stock levels at the service centres and relatively weak demand are creating some resistance.