In the flat products category, the EU mills are now making strong efforts to push up prices for the final quarter of this year - after cutting back on output over the past few months. This initiative is likely to be partially successful. Inventories of hot and cold rolled coil have decreased due to a combination of lower output and reduced import volumes. A modest rise in fourth quarter negotiated figures is anticipated for these products. Success for plate and coated strip may be more difficult to achieve because the import threat is more severe.
We are forecasting EU price rises for most products in the spring of next year. However, these could be threatened by a new wave of imports from Asia if the differential between the two regions selling values remains at near the $US100 per tonne mark.
Despite announcements of price increases for strip products from the major EU in the past month the market continues resist. As MEPS point out, reduced production and falling stocks at users and Service Centres will eventually result in prices rising.
Recent reports of increasing manufacturing activity if continued could accelerate the pressure on pricing, but as always overcapacity in the Far East is always a threat to price stability. Whilst China may well drive steel demand as reported by the IISI, it also warns that :-
“Whilst the strongest growth continues to come from China," the iron and steel institute said. But if the country's production outpaces demand, the institute warned, it could cause a glut that would push down world steel prices”