The downward trend in EU flat product selling values persists. The poor economic outlook in many parts of the world, combined with global overcapacity, has led many international suppliers to focus on the West European steel market. Meanwhile, the traditional destocking period, before the end of the year, has resulted in a seasonal slowdown in demand. The differential between offers from producers in the north and south of the region continues at an unsustainable level.

German mills have reduced prices in an attempt to improve their unsatisfactory plant utilisation rates. Demand has slowed a little in the second half of the year, leaving distributors with surplus stock, which will negatively affect their balance sheets. Consequently, service centres are trying to adjust their inventory levels. This has led to reduced quantities being placed with the mills. Ordering may take place at the end of 2015, to provide them with the material to operate in early 2016.

In the French market, prices have continued to fall significantly, since our last report. They are still under threat from imported steel. Stockholders describe the general level of end-users’ activity, in terms of volume, as “fairly satisfactory”. Negotiations with the auto industry for first half 2016 contracts will start at the beginning of December, with the mills under pressure to make reductions. If they concede, it will prove difficult for them to raise first quarter prices for the rest of industry.

In Italy, domestic producer, Ilva, has been price-matching third country import offers, in November. Huge volumes of Chinese material, ordered earlier in the year, are sitting at the ports. Overall, underlying demand is quite stable. Service centres want to destock for the end of the year, even though they are already placing some orders for delivery in 2016. Resale values are very low as end-users constantly push for concessions.

UK basis values have been put under pressure by third country importers and mainland European suppliers, taking advantage of the strong pound. Distributors report that demand, although quieter than in the summer, has still been reasonably healthy. Their profit margins remain good. There is more intertrading than normal between service centres because their stocks are low, as are traders’ inventories at the docks.

Belgian selling values were under pressure, in November. Many cheap offers from China have influenced market values, despite few orders being concluded. Buyers have been purchasing from Russian sources at competitive levels. Large quantities of material have been arriving from southern Europe, especially from Spain, with very short delivery lead times – one week only, in some instances.

In Spain, sales have improved a little but competition from ever decreasing Chinese prices is hitting both the mills and service centres. Delivery lead times are short, enabling customers to work with lower stocks.


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