EU domestic flat product selling values continued to decline, in October, driven down by low import quotations and decreasing raw material costs. Moreover, the differential between offers from suppliers in the north and south of Europe is too vast to be sustainable for any length of time. Activity remains subdued and buyers, believing that further price cuts are inevitable, are purchasing very cautiously.

German customers complain that, since the return from the summer holidays, business levels are not as good as expected. Volumes are below those seen in June. Service centres report that order intake is tepid. Since their inventories are quite high, they have started to destock, which is likely to depress prices even more. There are fears that the situation at VW could have a negative effect on car sales, thus impacting the German economy.

In France, buyers have adopted a ‘wait and see’ position. Many gaps in inventories were filled in September. Consequently, orders in October are very slow to materialise. Producers, having failed to resist negative price pressure, have cut their selling values, as they try to compete with increasingly lower third country offers. Quantities, booked recently, are expected to arrive in the French market by the end of the year.

In Italy, domestic prices have been aligned to those of imports from numerous sources. Moreover, quotations from foreign sources are constantly decreasing. Buyers are waiting until the last moment to conclude orders, as they anticipate further downward movements. Real consumption is improving slowly, sustained by a busy auto sector and recovery in the mechanical engineering industry.

In the UK, stockholders note that demand, although still quite good, has contracted slightly from its recent peak in the first few months of 2015. Resale selling values are falling in tandem with mill decreases but with a small time lag, in most instances. Although imports are on offer, the majority of non-UK orders are being placed with continental European suppliers. Nevertheless, third country prices are influencing domestic basis values, which have weakened again, this month.

Producers supplying the Belgian market continue to revise selling values downwards as import pressure persists and input costs remain low. The large mills are no longer trying for price hikes. They would be satisfied to roll over current levels for quarterly and half-yearly contracts. Underlying demand has not changed but end-users buy only what they need for immediate requirements, knowing that delivery lead times are short and material is likely to be cheaper at a later date.

Spanish consumption is stable. However, service centres have begun to destock ahead of the financial year-end. Since our last report, third country import price offers have undergone a sharp downward movement, leading to further domestic basis price reductions on all flat products, for December. As there is still a large differential between local and foreign figures, buyers envisage further discounting for January/February business.



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