The following report is from MEPS
Underlying demand for strip products remains healthy in most EU countries. Several producers are already talking of higher prices in the second quarter. Official announcements by some major players have still to be made. Certainly, import prices for third country flat products are now above those quoted at the beginning of the year.
In Germany, demand and stock levels are satisfactory at the distributors but order intake at the mills is slower than expected. Basis figures are unchanged at the moment. Producers have made clear their intentions to lift values for period two, although the actual amounts have not been discussed. Negotiations will commence in earnest at the end February/early March.
Mill prices in the French market started increasing in the latter part of January as demand improved and the rises are continuing in February. Resellers, however, have not yet managed to pass them on to their customers. Producers are now reported to be looking for new basis price hikes of €10/15 per tonne for the second trimester but it is too early to say to what extent they will be implemented.
Italian strip product values have improved, albeit only by small amounts. A number of events have contributed to the recovery. Import price offers are higher than of late. Less competition is expected from China because of good internal demand and threats of anti-dumping measures by Eurofer. Moreover, raw material costs are also on the up. Stocks are in balance and market sentiment is much better.
UK inventories are well suited to today's steady demand. Period one is virtually sold out. Second quarter pricing is uncertain at the moment but all major EU suppliers are expecting to get increases through. There are only a few offers from third countries at present. A lot of material is standing at the ports, most of which is sold. Service centres are including this in their measurements of inventories and state they are still not overstocked. However, a lot of foreign material is running late and will not now arrive until the second quarter. Resale values, which came down through period four and into early 2007, have now stopped falling. Distributors are still making profits but hope that a mill increase in April will reverse their price trend.
In Belgium, domestic values have started to firm for March deliveries because import offers from Chinese suppliers are more highly priced than before Christmas and, therefore, are not so interesting. Stocks are depleted because many service centre buyers, expecting prices to continue to slide during the first quarter, waited before placing orders. Distributor business is brisk.
Strip product inventories at Spanish service centres have been significantly reduced during the last two months and are now satisfactory. Currently, demand is quiet as end-users have also been destocking. However, since early February, distributors report better resale prices - earlier their margins were very poor. Large tonnages of third country material have been ordered but current price offers are strengthening.