The EU steel market is quiet. Buyers are holding back from placing business because they sense that prices may fall further during the first quarter as commercial quality material is readily available from a number of sources at highly competitive prices.
The 2007 outlook for Germany's steel using industries is very positive with current consumption at a satisfactory level. However, the proposed first trimester increase has been rejected by customers, who are anticipating the arrival of large quantities of third country imports early in the year. Service centre stocks are rising although end-users' inventories are normal. Lead times from EU mills are shortening.
Basis prices are generally down in the French market at the beginning of January as a consequence of lower import offers. More third country material is due to arrive in the coming 2 to 3 months but is unlikely to flood the market.
The downward price trend that started in Italy at the end of Summer 2006 continues as domestic mills drop prices in reaction to escalating volumes of imports. Stock levels at most distributors will cover them until February/March. Buyers are loathe to speculate until they can see the direction of the market for 2007. Currently, there are too many offers compared to demand. Underlying consumption, however, is quite satisfactory.
In the UK, activity slowed quite early in the run up to Christmas but real demand is still reasonable. Stocks are not excessive. Both suppliers and service centres are optimistic about business from period two onwards. There will be third country import pressure on prices of standard material during the first quarter because of orders placed last year. But new offers are at higher figures and, therefore, may not be attractive to local buyers. We have noted some negative price movements since early December.
In Belgium, EU mills are no longer claiming basis price increases for period one. In fact, some products have suffered a downward correction. Third country imports, ordered in the fourth quarter, are now arriving and putting further negative pressure on values. However, new foreign offers are not so interesting. Stocks are at a reasonable level throughout the supply chain. Service centre business is brisk.
Considerable volumes of non-EU imports continue to undermine the Spanish market, despite a positive business climate. This has impacted particularly on resale values, which have dropped sharply over the last month, as distributors fight for orders and try to rid themselves of excess stock. Real consumption has moved very little. Construction is slowing, albeit from a high point. With the exception of major projects in the Madrid area, investment in public works is quite low
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