ECONOMIC TURMOIL LEADS TO WEAKNESS IN EUROPEAN STEEL MARKET

ECONOMIC TURMOIL LEADS TO WEAKNESS IN EUROPEAN STEEL MARKET latest MEPS report

Despite earlier market expectations to the contrary, European demand has not picked up following the long holiday break. This is partly due to grave concerns over the financial situation across the region. The mills are experiencing low levels of order entry and, consequently, some production cuts have already been announced. ArcelorMittal has idled several of its blast furnaces in France, Belgium and Germany. This may also have to happen at other European sites. Producers have signalled their intention to push up strip mill prices for the fourth quarter but the success of this initiative is questionable. Third country material, booked earlier in the year, is now starting to arrive at the docks but the import threat, as far as new orders are concerned, has receded.
There are fears of a serious slowdown in the German market. The summer months of July and August have been exceptionally quiet. End-users have work for now but their forward order books are looking thin. Buyers are reluctant to place steel business before they can clearly see the direction of prices in the final trimester. Current domestic spot market values are slightly below those tabled in July.
Activity remains sluggish in the French market in early September. There is little enthusiasm to purchase, especially with today’s economic turmoil. Distributors are working with the steel they have in stock. Nonetheless, producers have been talking about increases. However, buyers do not believe the current market situation can justify any advances.
In Italy, Riva, Marcegaglia and Arvedi have announced price hikes for strip mill products with immediate effect. However, in reality, there has been continuing weakness during the summer. The economic chaos, widespread through the eurozone, is worrying customers, who see no hope of improvement in the steel industry in the near-term, either at home or abroad. Consumption is at a low ebb.
The UK market is described as “weak and depressing”. Producers reacted to a lack of orders by slashing prices, week on week, through August but things may have settled now. Customers who took advantage of these opportunities are now covered for most of period four. Distributors report that business is as tough as ever, which is a reflection of the general economic situation. Their resale values are under considerable pressure.
The Spanish scene is described as “dreadful” with a continuation of July’s total lack of activity. Confidence is very low. Service centres report that they are selling less than in the first two quarters because end-user consumption is dire.