Activity is slowly returning to the EU market after the dormant Summer holiday period. The quantities of imported strip mill products arriving in Southern Europe dropped during August. Customers are expecting import price offers to be higher during the Autumn because of an anticipated decline in availability from China and a need to recover escalating raw material costs. Nevertheless, some local prices have slipped during the vacation - this is particularly true for the coated products. EU producers still appear undecided regarding period four pricing and no official announcements have been made so far.
Although real consumption remains healthy in Germany, demand on the mills has lost some momentum because of overfull inventories at the distributors. Resale values for strip products are much lower than four/six weeks ago. As many service centres have sufficient stocks for the next two months at least, it is difficult to envisage any increases being secured by the mills for October/December. Some buyers appear disillusioned with the third country deals they made earlier in the year as delivery lead times were even more extended than they initially expected. We also have reports of a number of quality problems.
Demand has started to pick up in the French market since the beginning of September. The Summer was quiet with stockholders ordering very sparingly. Our sources see inventories at a medium/high level. Distributors believe that strip prices will be stable throughout period four.
In Italy, the price falls of early Summer have been arrested and producers are starting to look for some small increases. However, competition at the distribution level is quite strong as the destocking process continues and service centres will find it difficult to pass on any mill rises to their customers. Some improvement in activity is anticipated during October.
The UK market has been quiet since mid-July. Order intake is described as "steady but not exciting". Buyers are concerned about the fourth quarter but, so far, there have been no mill announcements. Domestic prices softened over the Summer as producers tried to create business during the holidays. However, import values from Asia are now moving up.
The price trend in Belgium appears to be a negative one. Plenty of material is standing in Antwerp port, some of it rusting outside because the warehouses are full. This is partly as a result of insufficient decoiling capacity. A great deal of the steel was ordered back in March/April at low prices. It is depressing the market. Generally, stocks are reasonable at the distributors and demand remains good.
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