In Germany, service centres still have high inventories and mills are holding stocks which have yet to be called off by customers. This is adversely affecting the market as buyers hold back from placing new orders. Producers are highlighting escalating input costs as the driver for price rises in the second trimester but many players do not believe the market will be sufficiently strong to support big increases. The mills may have to, at least initially, absorb some of the costs themselves.
The French market is slow to restart after the holidays but demand is expected to pick up within the next couple of weeks. For now, in early January, prices are stable, compared to the end of the year. Strip mill product values are expected to move up for second quarter supplies.
Activity levels remain low in Italy following the late return to work. Nevertheless, underlying consumption, especially by the auto and mechanical engineering sectors, is strong. The price tendency over the first and second quarters is likely to be positive as mills will be obliged to recoup some of their soaring input costs. However, huge increases are not anticipated. Many buyers are covered through to February/March and are only purchasing material to fill gaps in their inventories, which are now more under control. For recent deals, Riva has withdrawn the small discounts offered in early December, putting prices back to the November level. Stocks at the ports have reduced to more normal volumes, although there is no lack of foreign material. There are very few new quotations from China, India or Turkey as third country suppliers wait for European values to move up.
UK prices remained firm over the last month. Demand is steady but not strong and shows no signs of improvement. Stocks at customers are adequate for current consumption through to March/April. It is apparent that suppliers want to lift prices, certainly by period two, but it is questionable whether buyers will accept this. However, there is very little alternative non-EU material on offer.
Demand on Belgian service centres is good for the time of year. Mill prices have not changed from December but customers expect to face advances quite soon as ArcelorMittal is reportedly telling some buyers that the first quarter is already sold out. There are very few new arrivals at Antwerp port, especially from China. Resale values are now keeping pace with last year's mill hikes.
In Spain, the majority of period one business was booked before Christmas. Although mills are claiming a roll-over of prices, our research shows some modest discounts on the final quarter 2007. However, any unsold quantities are likely to be more expensive as there is almost no third country competition. Buyers have purchased quite large volumes from European suppliers ahead of a perceived rise in the second trimester. The distribution sector, where resale prices have been depressed for some time, would certainly welcome some official positive movement from the mills. Stocks in general are no longer excessive.