An Interesting observation from MEPS, regarding flat steel prices in Europe.
Prices for flat rolled steel products in the European market are showing widely divergent trends this month. A steep gradient has emerged – prices get progressively stronger as you move from south to north. Prices are falling in Italy but rising in Germany and Scandinavia. There is also a feeling of weakness in some other south European markets.
The MEPS published negotiated basis prices in Italy have fallen this month by 6 percent for hot rolled coil and by 6.7 percent for cold reduced coil. The prices for plate and hot-dip galvanized have also come down, but by only 3 percent in the same comparison. This weakness is spilling over into neighbouring countries such as Austria, southern France and Spain.
In northern Europe, mills have had some success in winning the price increases for flat products. This is the case for hot rolled coil and galvanized, where the German market is seeing month-on-month increases. Cold rolled coil prices have moved up less strongly.
Part of the reason for the divergent price trends is the volume of imports of strip products from third countries into the EU. These have been at record levels this year and are being concentrated very much in southern Europe. Evidence from import licence applications suggests that volumes will remain high through to the end of the year.
Shipments from China are particularly noteworthy. They reached 1.7 million tonnes in January-July and may exceed 4 million tonnes for the whole year. Chinese producers have indicated that they will be reining back their exports to Europe in 2007. If they do, other suppliers in Iran, India and Egypt may step in to fill the gap.