In Germany, consumption is normal but service centre inventories are building as buyers make speculative purchases because they fear material will continue to be in short supply. Additionally, they anticipate even higher prices in the future. By late third quarter, stock levels could be too high for demand. The general economic situation is not good. The high value of the Euro is having a negative effect on exports of manufactured goods and energy costs are rising. Nevertheless, the European mills will probably announce another round of price advances for period three. Third country offers are not attractive at present but may well become so, due to the weak US dollar.
Prices are rocketing in the French market with increases taking place on a weekly basis. Meanwhile, demand is described as "average" with stock levels satisfactory at both distributors and end-users. Availability is constrained as imports from non-EU sources continue to decline. Sales to the auto sector remain fairly good but activity in the home appliance industry is weaker.
Despite relatively low consumption due to a poorly performing general economy, steel prices continue to escalate in Italy, sustained by supply-side restrictions. There are virtually no workable offers from third country sources. Moreover, many market players believe that European mills are maintaining low output levels in order to drive values up - using higher input costs as justification. Certainly, the producers are talking of further hikes through to August. Inventories are normal at the service centres, where resale prices are failing to keep pace with the steel makers' increases.
Supply is limited in the UK with virtually no material available from third countries. Domestic mills are already preparing customers for a "huge" price hike in the third quarter. In the meantime, values for the remainder of period two continue to soar, despite muted demand and no sign of any significant improvement. Distributors are keeping stocks on the low side because they do not want to be left with high priced inventories as they run into the holiday period.
Belgian buyers are being informed that the second quarter is nearly fully booked and ArcelorMittal is claiming a further increase of around €80 per tonne for July deliveries. Demand is stable at a normal level but there is a lack of material in the market place and customers complain that mill delivery delays are becoming more pronounced. Stock volumes are reasonable but with gaps appearing because of the extended lead times. Non-EU import offers are scarce.
Spanish values continue on an upward trend but service centres report weak demand, particularly from the construction sector where activity levels are crashing. Customers are becoming increasingly cautious because they fear a price reversal later in the year. They are buying for their immediate needs with no speculative purchasing whatsoever. Stocks at distributors are on the low side of normal with some shortages developing for certain grades/sizes. More offers are becoming available from third country suppliers but prices are still very high.
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