The EU flat products' market continues to be characterised by supply tightness and rising prices in a climate of relatively flat demand. The availability of competitively priced steel from third countries remains at a low level. Meanwhile, ArcelorMittal announced a further increase on strip mill products of around €50 per tonne for new bookings for September delivery. The company warned of probable further upward adjustments in forthcoming quarters. These proposals have no guarantee of success in the current climate.
Material is hard to locate in Germany with delivery lead times of around six to eight weeks for commodity grade products. Only small quantities are being offered by non-EU mills and the prices are not interesting to German customers. Buyers tried to purchase ahead as they saw values constantly escalating and now business is starting to decline, particularly demand from construction. Projects may be cancelled due to the expense of steel.
Demand seems to be running out of steam in the French market and the pace of price rises has slowed down. There is very little imported material available and offers are higher than European ones. Negotiations have not yet started for the fourth trimester but buyers expect producers to try to implement increases of about €50 per tonne. In the meantime, automotive annual contracts have not been renegotiated.
There is virtually no third country import pressure in Italy. The small quantities that are coming in are at very high prices. The dependence on domestic supply has allowed local mills to secure further hikes, despite relatively subdued demand. Inventories are at a reasonable level and there is certainly no speculative purchasing as both service centres and end-users are finding it difficult to finance stocks. The banks are reluctant to lend money, especially to auto related companies. The economic outlook is poor and consumer spending is cooling rapidly.
UK demand is stagnant at best. Distributors continue to keep stocks to an absolute minimum because they are not selling large amounts to end-users. Manufacturing industry consumption is slowing, causing a lot of concern over the future direction of the steel market. However, supply remains tight as third country imports have dried up and ArcelorMittal has reduced sales to the UK because of the unfavourable sterling/euro exchange rate. Corus is expected to try to lift prices again in the fourth quarter. For now, the company has concluded most period three deals.
Belgian demand is relatively slow with end-users only purchasing small volumes at any one time from distributors, who, in turn, are keeping their own stocks as low as possible. Nevertheless, values continue to strengthen although some respondents believe prices may have peaked.
The Spanish market is starting to wind down sooner than usual ahead of the August holiday. Service centres claim that overall sales fell by 20 percent in June and that July has started off in a similar manner. Construction demand continues to reduce and, although export sales of cars are holding firm, manufacturing for the domestic market has fallen. Steel distributors are not carrying huge stocks. In fact, many are buying from each other, rather than place forward orders with the mills.