MEPS EU steel Prices – latest report

There is something of an impasse in the west European flat products market as customers prefer to sit on the sidelines rather than place business at the inflated prices being demanded by the domestic producers. Consequently, order intake at the mills is slow. Many companies have stocks that are adequate for now. These were purchased in late 2010 and early 2011, ahead of the increases. Buyers think that the steelmakers may eventually be prepared to relax their offers. However, escalating raw material costs in the second quarter are likely to persuade them to push for further hikes.
German customers are battling higher basis values because final users cannot always pass on their growing costs by putting up the price of their finished goods. The market is quiet since many companies have enough steel in stock and are not ready to pay more just yet.
In France, last month's surge in basis values is tailing off. Producers are finding it more difficult to implement further increases as demand remains moderate. Some buyers will not order as they claim to have sufficient material to enable them to wait until the summer holidays. However, mill delivery lead times are extending and a number of distributors' inventories are quite low.
Italian end-users, having decided not to accept further increases, have virtually stopped purchasing. Consequently, the stockholders have problems recouping the most recent mill hikes from their customers and are now living off existing inventories. They bought heavily at the end of 2010 and can afford to wait before reordering. For now, the producers are still claiming the inflated numbers but cannot sell at these levels. Moreover, quantities of third country imports are arriving at the Italian ports, so the domestic mills may well be forced to reduce their price expectations.
The UK market has been quite busy as both service centres and end-users bought ahead of perceived price rises. MEPS has noted a number of upward price movements over the last four weeks. However, some distributors are already well covered for the second quarter. Having bought third country tonnage at the end of last year, they do not need to pay the higher values that local mills are demanding. At present, there are few new attractive foreign offers to dampen the positive tone of the market.
Spanish steel consumption is absolutely flat. The economic situation shows no positive signals. The service centres were relatively busy in January/February as end-users tried to beat the price advances but the market is quieter now. Distributors are struggling to recoup the mill increases. Companies bought third country material quite heavily last November. This is now starting to arrive at the ports, so they are in no hurry to re-order.

Source MEPS UK

Whilst 2011 and has started quite strongly in the UK, it does seem that buyers are now holding off placing orders. Although some products are short on availability, stocks seem generally high within the market and companies are holding back on re-ordering. It is clear that the steel producers are eager to push prices higher, but a strong resistance amongst end users to accept further increases is squeezing the distributors.

 

Technorati Tags: europe,Steel strip prices,MEPS

Tata announce £95 price increase in UK

Tata have announced a £95 price increase on structural steels in the UK. The increase in prices will take effect on all deliveries from March 6th 2011.

The company are quoting the rising costs of raw materials as the main reason for the price hike.

Flat product prices have risen by an average of around £60.00 already throughout Europe and contractual customers in the UK are facing price increases of around £80 from Northern European suppliers from April.

Demand still remains weak, with the construction sector in depression and modest activity in the automotive industry.

 

Technorati Tags: Steel prices,Tata,UK,steel sector

ASD expanding in Yorkshire

ASD Metal Services, a division of German metal group Klöckner & Co, is to double the size of its facility in Leeds.

The steel and aluminium stockholder and distributor has taken a 15 year lease on 215,000 sq ft, creating a combined facility of 400,000 sq ft.

Kaha Avaliani, chief executive of ASD, said “The acquisition of the adjoining premises will enable us to centralise our stock holding activities and increase efficiencies within our distribution chain. The new facility will also allow us to carry a greater range of stock items and through the installation of new machinery offer a new service to our existing and future customer base.”

Technorati Tags: steel,steel stockholding,ASD

Steel tensile strength conversions

The tensile strength of steel can be quoted on a number of imperial and metric scales. The factors below are useful for converting.

One newton per square mm is equal to :-
Metric
bar	10
kilopascal	1000
hectopascal	10000
megapascal	1
millibar	10000
pascal	1000000
kilogram per square centimetre	10.19716
kilogram per square metre	101971.6
newton per square metre	1000000
kilonewton per square metre	1000
meganewton per square metre	1
newton per square centimetre	100
British and U.S. (Imperial system)
thousand pounds per square inch	0.1450377
pound per square inch	145.0377
pound per square foot	20885.43
ton per square inch	0.07251887
ton per square foot	10.44272

Whilst conversions between tensile strengths and steel hardness are not exact comparisons a chart showing comparisons can be found here.

Technorati Tags: steel tensile strength,steel hardness

Spring Steel Strip in small quantities

BSS Steelstrip are specialists in supplying small quantities of spring steel strip. We can offer a wide range of sizes to suit small volume manufacturing and for prototype development work.

We are able to offer a wide range of materials for small batch production and development and prototyping, including:-

Hardened and tempered polished polished carbon spring steel in CS80, CS90, 75CR1 and CS100 from 0.05mm to 4.00mm

Hardened and tempered stainless spring steel in type 420 from 0.1mm to 3.00mm

CS70 annealed spring steel strip

Temper rolled type 301 stainless spring steel from 0.005 to 1.20mm

Additionally we can supply stainless and mild steel hard rolled shim stock, medium carbon sheet, music/piano wire, and spring steel blanks.

As a further service to designers and product developers we are able to offer laser cut profiles to your drawings and small batch spring production.

For more information call Steve on 01709 530591

Arcelor to cut steelmaking capacity?

ArcelorMittal, said on Thursday it was considering halting up to three European blast furnaces (BFs) in the third quarter to meet lower demand. "In Europe the third quarter is characterised by lower demand due to summer vacation shutdowns.

In order to be prepared ArcelorMittal is technically in a position to reduce its production by stopping up to three BFs in Q3," the company said in an emailed statement.
"No decision if and where and when has been taken," it added.

Cutting capacity to protect prices at a time of low demand is a tactic used regularly by steelmakers.

Technorati Tags: ArcelorMittal,steelmaking,Europe

THE MEPS - EU AVERAGE ALL PRODUCTS STEEL PRICE DIPS AGAIN IN NOVEMBER

The EU producers are currently facing low order intake as the flurry of activity in early September has tailed off now that distributors have restocked to appropriate levels. In many countries, prices have been lowered a little to encourage purchasing. Negotiations will start soon for first quarter 2010 business but no official announcements have been made yet, regarding the mills proposals. The threat of excess supply is still causing unease as the steelmakers expand production output while demand from the key consuming sectors remains weak. As far as imports are concerned, more expensive Chinese offers are dampening interest from potential customers.
There are very few agreements being concluded in Germany. Buyers appear to have sufficient material to see them through to the end of the year. Although the service centres have low stocks, they are loathe to replenish them because they remain wary about the real state of consumption, despite official views that the economy is reviving. Customers are expecting prices to be lower in period one due to poor demand and increased production. Third country suppliers are offering deals that look competitive at present but are unlikely to be so by the time the material arrives.
Flat product values have eroded in France, despite delayed deliveries. Producers have tried to hold the levels achieved at the beginning of the fourth trimester but spot prices have edged down. First quarter numbers will probably be below those settled in September. Demand is described as "modest". Activity in the automotive industry has improved significantly compared to earlier in the year. Sales to other consuming sectors are also on the rise, although still well below the norm.
Reflecting the state of the Italian market, Riva has dropped basis figures once again in an attempt to generate more sales. Confidence is quite low as demand has deteriorated since the beginning of September. Despite much talk of imports, very little third country material has actually been ordered and port stocks are very depleted. The lack of availability of finance has become a major headache. Traders cannot open letters of credit and final users are also finding it difficult to pay for steel.
In the UK, underlying consumption generally is poor. Restocking and a lack of supply during the summer and early autumn caused the recent spike in prices. The mills are telling customers that availability will still be constrained in the first quarter. There are no surplus inventories now. Service centre margins are healthy because of the tightness in the market.
Activity remains quiet in Belgium. The steelmakers are unable to increase, or even to maintain, basis values. The re-ordering to fill gaps in service centre inventories is now finished and all buyers (at stockists and end-users) are only purchasing what they need. Some have financial problems. The industry is only now seeing the real damage to companies caused by the economic crisis.
In Spain, import offers are slightly more expensive than a month ago. Local suppliers are bringing their prices down to meet this level, thus retaining market share. Stocks have reduced considerably and distributors are keeping them under control due to concern that demand from major steel consumers remains weak. The domestic steelmakers continue to boost their export sales.

Source: MEPS - European Steel Review

Technorati Tags: MEPS,European Steel,Steel Strip

Steel Demand Expectations Collapse To Late 2008 Levels

Your industry news article on a steel business briefing report:-

Steel Business Briefing warns that demand expectations in the steel industry could drop as low as they did in December 2008, at the height of the global financial meltdown. With the downward trend expected to continue at least into early 2010, this is bad news for producers as end-use consumption is currently insufficient to boost further demand.

The report goes on to contrast the view with the views of the World Steel Association’s more optimistic view

Read the full article here

Technorati Tags: Your Industry news,Steel business briefing,Steel,Steel demand,Steel strip

MSCI News - Steel inventories inch higher in U.S. and Canada

With steel shipments from metals service centers slowly rising, inventories of the metal, in decline since early last year, rose slightly in the United States and Canada, the Metals Activity Report from the Metals Service Center Institute shows. Shipments of aluminum products also rose slightly, but inventories of the light metal continued to decline in both countries.

Steel Product Activity

September shipments of steel products from U.S. metals service centers totalled about 2.56 million tons, down 31.4% from a year ago but ever-so-slightly higher than August shipments. For the year to date, steel shipments of nearly 22.4 million tons are down 41.2% from the same period last year. Monthly steel inventories, which peaked at 11 million tons in August 2008, rose for the first month since then to 5.79 million tons, or 3% higher than at the end of August, although still 45.7% lower than in September 2008. At current shipping rates, that represents a 2.3-month supply.

Canadian service center steel shipments totaled 455,100 tons in September, 14.8% lower than a year ago but 9.5% higher than in August. Shipments for the first nine months of the year total 3.7 million tons, or 30.4% below the same period in 2008. Canadian steel inventories inched higher to 957,300 tons, or 33.9% below the level of a year ago, but 0.17% higher than in August. At current shipping rates, those end-of-September inventories represent an unusually low 2.1-month supply.

MSCI News Press release.

Technorati Tags: USA,Canada,Steel stocks,steel inventories,MSCI

European steel prices slipping?

We have argued for some time that recent price increases implemented by the steel producers were premature and counterproductive.

Shortages due to greatly reduced inventories which in themselves were the result of poor sales lead to end users and distributors placing new orders in June and July. It was naive in the extreme for the steel producers to interpret this as a sign of a real increase in demand. As a result production was increased and there is likely to be a glut of steel in warehouses with real demand still very low. Attempts to move these stocks is likely to put downward pressure on prices. Whilst some grades and sizes are still in short supply and demand price premiums, even this situation will ease very quickly as orders placed in the early summer are fulfilled.

The recent MEPS report supports our view:

The downward trend in steel prices, predicted by MEPS (International) Ltd. last month, has already begun for flat products in some European countries. Material has been in fairly short supply in recent months because producers have continued to restrict their output. Moreover, buyers have undertaken some stock replenishment, after paring back their inventories to minimum levels.
It was anticipated that the mills’ planned production increases would tilt the supply/ demand balance and halt the recent upward movement in prices. In fact, this has been exacerbated by the absence of any sign of a substantial improvement in end-user demand. The higher selling figures available have also attracted imports – particularly from Asia. Most flat steel products have become more readily available and values have started to fall in mainland Europe.
There are some exceptions. Holes in inventories have buoyed the price of galvanised steel in some countries. Furthermore, while plentiful supply has constrained commodity grade plate figures, it has been possible to achieve higher selling numbers for superior specification material.
MEPS’ research has found more optimism in the Nordic countries. Notwithstanding, it is not clear at this stage whether there is a pick-up in real consumption, or if it is an example of the region’s traditional lag behind the markets of Western and Southern Europe.
Demand for long products, too, has diminished after a brief period of restocking, and this will be aggravated by the seasonal downturn in construction activity. Small price increases for many products, at the beginning of October, were supported by earlier hikes in raw material values. However, scrap costs have since fallen and longs selling figures are destined to follow.

 

MEPS STEEL NEWS

The World Steel Association is forecasting growth in steel demand in Europe of around 12% in 2010 (and interestingly up to 25% in the UK). This is against a background of a fall of some 40% in 2009.

I would be surprised to see growth significantly higher than this and treat the occasional rhetoric by steel producers “talking up demand” with caution.

Technorati Tags: Steel demand,steel prices,MEPS

Steel industry recovering after Chinese stimulus - Times Online

The Times online commenting on a report from the World Steel Association paints a more optimistic picture for the steel industry for 2010.

The long night is almost over for steelmaking, which will enjoy a strong recovery in 2010, the World Steel Association (WSA) predicted yesterday.

Exceptionally strong consumption in China means that demand for the steel output of the world’s mills will rise by 9.2 per cent next year, a recovery to 2008 levels, the association said.

Even the UK should get a big boost. After a near-collapse in the market this year, with demand falling by more than a third in Britain, steel use is expected to rise by 25 per cent next year.

Daniel Novegil, chairman of the WSA’s economic committee, said that the global recovery was stronger than the organisation had predicted in April.

Read the full report at Timesonline

It would probably take a 40% increase in demand in the West to take us back to 2008 levels and whilst this would be welcome I feel it is unlikely that the recovery will be this rapid.

 

Technorati Tags: Steel Industry,Economy,Steel demand,World steel association

Continuing uncertainty in Steel Industry

German iron and steel production rose during September, suggesting demand was improving, but was still down sharply from a year earlier as the market remained weakened by the economic downturn.

German mills produced 3.5 million tons (3.17 million metric tons) of steel for the month, an 8 percent increase on the previous month. Year to date however production remains 40% down on 2008.

In an interview with the Financial Times Wolfgang Leese, the CEO of Saltzgitter criticised rival steel manufacturers such as Arcelor for increasing production during poor market conditions."We only have a small temporary peak that in my view will last until the end of the year roughly," he continued, referring to demand stemming from inventory restocking.

Whilst both orders and steel prices have risen recently, we believe restocking to be the primary cause, an effect that is likely to be short lived.

Despite the recent price increases, there are signs already that increases have stalled, and some slippage is already evident, particularly in China.

Technorati Tags: Steel Industry,Steel demand,steel prices

 

 

 

MEPS steel prices review

According to MEPS double digit steel price hikes have been recorded for the July to September period in EU flat products sector. Most of them have occurred in recent weeks as customers started to reorder after the August summer break. The increases have not been generated by significantly higher real demand. The main driver has been a shortfall in supply.

It is estimated that over the past twelve months activity in the steel consuming sectors fell by between 30 and 35 percent. Consequently, most steel users and service centres embarked on a strategy of inventory drawdown. Over the same time horizon, the mills cut back production by 40/45 percent.

Market conditions have now changed. Stock reduction is almost complete. Customers are ordering more steel to meet their real demand but output remains low. Shortages are being noted in the flat products’ segment with the consequent hike in selling prices. Local mills have now recognised this situation and many are planning to bring back previously closed capacity. However, in the interim, shortages will continue.

EU producers may have left it a little late. Third country suppliers are already looking to jump in to satisfy the shortfall - particularly now that EU prices have improved. Chinese steelmakers have oversupplied their market and are looking for export sales to reduce their excess. East European prices are also looking competitive once again.

The tight supply situation is creating serious problems for those original equipment manufacturers which carry only small stocks and rely on the mills for regular deliveries. Under current conditions, the OEM’s bargaining power is reduced and increased volumes are difficult to secure. They have little option but to pay the increasing price demands.

Further but more modest upward price movements are anticipated in the short term. However, downward pressure on selling values is likely around the turn of the year as domestic capacity comes on stream and deliveries of third country material arrive in the final quarter.

SOURCE: MEPS INTERNATIONAL Ltd

We would agree with MEPS summary. Many UK OEM’s have been slow to reorder raw material, and low demand has lead to service centres running down their inventories. Some grades and sizes are almost impossible to locate in the UK at the moment and an element of panic is setting in. Spot prices have increased dramatically and we think this situation is likely to continue for some weeks until the supply situation eases.

Technorati Tags: MEPS,Steel supply,steel prices,steel demand

New orders boost Corus

We spotted the following report on netbusiness

THOUSANDS of workers at Redcar’s Teesside Cast Products site were boosted today by news that the steelmaker had secured orders to keep the plant operational until the end of October.

Since April, when the international consortium responsible for buying nearly 80% of the plant’s output abandoned a 10-year deal, employees have been living in fear of redundancy.

Earlier this month Corus said it was extending its consultation period with staff as the site’s order book had been bolstered until the end of September.

But today’s announcement will keep the plant busy until the end of October while work continues to secure a long-term future for the site.

Union bosses today described the announcement as "great news".

GMB regional organiser Jimmy Skivington said: "It gives us an better opportunity to talk to people interested in the business.

"And all the time the situation in the steel market as a whole is improving."

Fragile signs of recovery in the steel market were strengthened this week when it emerged that some steelmakers were preparing to bring idled blast furnaces back to life.

ArcelorMittal, the world’s biggest steelmaker, is preparing to relight fires from Ohio to Ukraine, while Corus is reviving strip steelmaking capacity at Llanwern in South Wales.

A rise in demand for construction strength steel in Asia has also boosted Teesside’s Lackenby beam mill with shifts increasing from 15 to 19.5, although the threat of 150 redundancies remains.

 

Whist we welcome to the cautious optimism regarding activity in the steel sector it’s important to see the situation in context. Service centres have been de-stocking for over a year now, and raw material at distributors and manufacturers is very low. Against this background it is inevitable that at some time those stocks have to be replenished. It is difficult for anyone to assess accurately how much of the demand is due to an economic upturn or simply bringing stocks back to a minimum level.

The steel manufacturers in recent years have demonstrated that they use any upturn in order intake as an opportunity to increase prices, and we are seeing evidence of this again.

Most economists are forecasting a very slow return of consumer confidence and economic activity, and a rapid increase in raw material prices could possibly slow or halt that recovery. We hope that the steelmakers adopt a cautious and responsible attitude, even if recent history does fill us with confidence.

Technorati Tags: Steel,Steel strip,steel industry,Corus,steel demand,Steel prices.

Steel Prices, Meps latest EU forecast

MEPS have published the following forecast

After peaking in August 2008 at €860 per tonne, the MEPS EU average flat products' price collapsed to €420 per tonne in May this year. This was the lowest figure for more than five years.
The weakening economic climate pushed end-user demand to extremely low levels. Distributors and steel processing companies were forced to reduce inventories. Weak market conditions led to continuous reductions in steel prices into the second quarter of this year.
The steel mills' reaction to the poor demand was to cut output significantly. Steel making capacity utilisation rates fell to approximately 53 percent in the first half of this year. These massive production curbs restricted supply and made a significant contribution to the bottoming out of steel prices over the last two months, limiting the prospects for recovery in the future.
Stock reduction is now almost complete in the flat products segment. Customers ordered larger volumes in recent months from domestic producers as they looked to fill gaps in their inventories. This helped steelmakers to push through modest advances in transaction values for strip mill products.
The price recovery is forecast to continue in the short term for all steel categories. Distributors are expected to resume their restocking efforts after the summer period and scrap costs could move higher. Customers will, almost certainly, increase order volumes in an effort to buy ahead of further perceived advances.
There are still downside risks to steel prices during the remainder of 2009 because end-user consumption is likely to stay low. Industrial production is predicted to decline by approximately 15 percent, year-on-year. European mills have also started to ramp up output on the back of rising sales. Steel making capacity utilisation rates moved up to above 60 percent in June. However, oversupply could develop if the producers increase activity too quickly. These factors may limit price advances in the fourth quarter.
Consumer confidence is expected to improve as economies in the region emerge from recession in the coming months. Underlying demand for steel related goods should grow. Credit restrictions are also likely to ease with banks becoming less risk averse. This will help to increase the amount of finance that is available to companies of all sizes. Consequently, buying power could improve as 2010 progresses.
The strengthening economic situation is likely to encourage further inventory replenishment by service centres and end-users during the first half of next year. This should help local steelmakers to push through price advances early in 2010. Consequently, mills are expected to lift production and return to profitability in this period.
Despite a predicted revival in steel selling figures in the New Year, the market will, almost certainly, be slow to recover. Consequently, we do not envisage a return to previous price levels during our forecast period.

We would largely concur with these forecasts and we have seen many reports recently of steelmakers bringing production “online” to facilitate orders as destocking ends and new orders are placed to replenish.

There does not seem however to be any marked increase in demand. Whilst the restricting of production has no doubt contributed to the halting and even reversing of the downward trend in steel prices, increased production in the third quarter, does carry a risk of placing prices under pressure again toward the end of the year, unless demand accelerates.

Technorati Tags: MEPS,Steel prices

Dramatic fall in Chinese steel prices, where next on Global Prices? | Steel Strip

We spotted this report today at Reuters, quoting from the metal Bulletin.

After a months-long rally to a 10-month high last week, the

price of benchmark hot-rolled coil in China—which makes half

the world’s steel—plunged 7.6 percent to around 3,987.5 yuan

a tonne this week, data from Metal Bulletin showed.

That in turn has dragged iron ore prices off their peaks as

well, with Indian spot market exporters reporting virtually no

deals this week, adding further complexity to price

negotiations.

 Read full story at Reuters

As recently as three or four years ago, steel prices movements, particularly in the West were an orderly affair with annual or bi-annual negotiations between the large steelmakers and their major customers (usually automotive). The outcome of these negotiations would provide the basis for general market prices.

The opening world market and the increasing demand from China, India and other fast growing economies have changed that forever. European mills in particular used demand from China to force up market prices dramatically, then the availability of Chinese steel exports started to temper the ability of Western producers to force price increases on the market.

Then came the international banking and economic crisis and steel prices fell as demand evaporated.

The steel producers however appear to have “seized” upon a glimmer of recovery (0.30% growth, in one month, in a couple of European economies) to announce price increases. At a time when demand is extremely fragile a decision that seems to us somewhat irresponsible.

Technorati Tags: China,steel prices

Meps say steel prices are rising

US mills' utilisation rates have crept up steadily over the last month and now stand above 47.5 percent. The recent dire market conditions appear to have bottomed and expectations are for a steady, albeit slow, recovery. Service centres report that business activity continues to be low but inventories are now generally in balance with the reduced level of demand. Imports into the US are not a factor in the market and licence applications from overseas suppliers are still registering month-on-month declines. Most major steelmakers have now announced a series of transaction price advances for strip mill products, following a leading move by AK Steel at the beginning of June. The increases are effective with new orders scheduled for delivery in July.
Canadian transaction values, however, are still falling. The escalation in the strength of the local currency versus the US dollar is making the country more attractive to US mills, although offshore imports remain virtually absent. Domestic producers have reported a couple of weeks of modest improvement in their order position. This is, ostensibly, inventory replenishment which suggests destocking may be near completion. However, the consensus amongst distributors is that market conditions remain very sluggish and the continued automobile closures and shutdowns have damaged any possibility of a summer upturn. A slight pick up is envisaged in the September/October timeframe.
Despite steady growth in imports and domestic output, the price trend for Chinese flat products has turned positive, supported by a strengthening of real demand and traders restocking ahead of further perceived increases.
The recent sharp production cuts in Japan have helped to reduce inventories. Moreover, a small recovery has been noted in demand from car and electronic goods makers, as well as overseas customers. Stocks of strip mill products held by local steelmakers and distributors, as end of April, fell to below the 4 million tonne mark for the first time in two years. Meanwhile, quayside inventories of imported flat products dropped by 13.1 percent in the same time frame. The mills hope to be able to gradually lift output in the Autumn.
Weak consumption continues to dominate the South Korean scene. Following Posco’s extensive price cuts last month, other local suppliers have brought their figures inline with the market leader. Demand is slowly recovering in Taiwan. CSC will lift domestic list prices for July and August by an average of 7 percent compared to June – the first official rise this year. The company has said the increases are due to supply shortfalls as steelmakers have been axing production during the global economic downturn. Chung Hung Steel also announced higher selling values for June contracts with both local and export customers, citing escalating input costs caused by more expensive slab.
Polish strip mill product values are unchanged when denominated in Euros but are slightly higher than a month ago when quoted in the domestic currency because of exchange rate fluctuations. Demand has worsened as the economic crisis cuts deeper and prices are not expected to show any significant growth during 2009. Producers are carrying on with their output curbs.
In the Czech and Slovak markets, although the rate of price decreases has slowed, the outlook remains pessimistic as end-users have very little work on hand. In May, distributors’ stocks plummeted to a level where it seemed they needed to re-order but they have only purchased enough to fill any gaps that might have appeared. Producers have tried very hard to push prices up and, initially, a few buyers agreed to pay a little more. However, the higher figures did not hold. Customers have received offers from Russia, India and China but the quotations are similar to those of more local suppliers.
In Western Europe, end-user consumption remains weak. However, buyers are coming back to the market, albeit only for relatively small quantities to replenish their dwindling stocks. Although EU producers have lifted their latest domestic offers, customers are hesitant to accept the increases. With the US dollar weakening against the euro and sterling, imported material is becoming more competitive. However, many purchasing executives lack the confidence to order significant tonnages on such comparatively long delivery lead times, bearing in mind the woeful state of real consumption.

Article courtesy of MEPS

In the UK we hear that the European producers are increasing prices, but we are at that time of year when the summer closures are upon us and activity levels are low even in normal times.

There is still a great reluctance amongst service centres and end users to commit to any volume, customers are mainly looking to buy, just what they need for now. this is less due to any caution about prices, and more to do with financial necessity to keep minimum inventories.

Technorati Tags: Steel Prices,Steel Industry,MEPS

Third of workers axed at Steel factory

Reported by the Express and Star on Friday the 23rd Jan

An historic Black Country steel firm is to axe a third of its staff, workers claimed today.

JB and S Lees, which was established in 1872 in West Bromwich, has announced 42 job losses employees said.

The company in Albion Road makes cold rolled steel strip.

Full story

Technorati Tags: JB & S Lees,cold rolled steel strip. UK job cuts

The current state of UK steel and manufacturing

Well, the last quarter of 2008 was a shock to manufacturing and the steel industry, as the global financial crisis and resulting economic downturn started to hit home.

The first half of 2008 had seen high steel demand, rapidly rising prices and shortages. Many pundits were forecasting more of the same for the foreseeable future, without of course knowledge of the looming crisis, that the banks of the world were about to visit upon us.

I will not dwell upon the role of the banks as their incompetence is indefensible, and the consequences for the rest of us are being seen all around.

Manufacturers, retailers and consumers rely on money to conduct business, it’s the facilitator of all transactions and when it is not available either in the form of cash or credit, business stagnates. Demand has not disappeared, but the means to facilitate demand has, and despite the unprecedented measures undertaken by governments around the world, this situation is not going to change any time soon.

Against this background the steel and manufacturing industry in the UK arrives in 2009, to the worst trading conditions of modern times. This recession cannot be compared with anything from the 80’s and 90’s, it is going to be deeper and longer, and change the face of our industry. It is all about confidence. The banks are not lending to consumers who are not buying goods, the manufacturers have no work and the banks are not extending overdrafts, the steelmakers and distributors have no orders, so production has stopped and plants are closing, some temporarily some for ever.

The UK shares these problems with the rest of the world, but suffers from some more unique ones. Poor payment performance within the industrial sector and the insolvency laws here have made suppliers wary of extending credit without insurance. The trade insurance companies have been “pulling” cover on large numbers of manufacturers, particularly those involved in the construction and automotive sectors. This means that it can be a risky business to supply companies active in these fields, even if they have orders to place. We are seeing large companies (who are household names) failing at record rates, yet a lack of orders means suppliers are taking risks and exposing themselves to dangerous bad debts. UK consumers have for years been financing their purchasing on credit supported by large equity in their properties, equities that are rapidly shrinking. Banks are running scared and foreclosing.

Manufacturing activity is falling at such a rapid rate that there is inevitably going to be an increase in business failures, with many manufacturing facilities closing for ever. The shrinking order book will result in closures within the steel supply chain, as even the largest and strongest companies cannot continue without work for long periods. Our motor industry is either on short time, shut, or planning extended closures, Jaguar Rover has it’s hand out for Government money (along with Corus), and the supply chain is on short time along with their raw material providers. Construction is at a standstill, and there are half completed building developments all over the country with work stopped.

It is not of course the end for our industry, and demand still exists and eventually the banking problems will be resolved, consumer confidence will increase, and we will get back to work. I believe however that the size and nature of our steel industry, distribution network and steel consuming industry is going to look a little different in a few months time.

It’s going to be a rough ride!

Technorati Tags: UK steel industry,UK manufacturing.

European Steel Market Chaos- MEPS report

 Meps are reporting on the dire situation in the European steel market

We are witnessing unprecedented steel market conditions. As mill order books collapsed, the steel makers were left with substantial amounts of part and fully-finished products. Consequently, there have been very few forward orders and most deals in the last two months have been supplied from producers' ex stock material.

Producers continue to impose swingeing output cuts in the face of this extraordinary downturn in real consumption and a massive destocking programme by customers. It is likely to be some time in the first half of 2009 before these measures bring the market back into balance and put a floor under ever-decreasing prices. The weak sales are tipped to worsen as the traditionally slow Christmas/New Year period fast approaches. Meanwhile, the steelmakers appear to be delaying any price decisions for the first quarter 2009 as long as possible.

Order intake at German mills is described as "disastrous". End-users are postponing or cancelling business. Service centres still have too much stock and are refusing to purchase until they have exhausted their inventories. Resale values fluctuate wildly. Third country import offers for January/February shipments are very competitive. However, there is little interest from buyers. Domestic producers are hesitating to reduce forward prices for period one, to figures that clients consider fair. For now, orders are being placed for early January supply at values to be agreed later.

French demand is weak as companies look to decrease their stocks. The mills have suffered numerous withdrawals of orders, particularly from the auto sector and distributors. Any market recovery is unlikely until at least the second quarter of 2009. Certainly, recent production curbs have had no impact so far. Spot prices continue to decline and may go down further until the end of the year. There have been some negotiations for the first trimester involving what producers describe as "more reasonable" price levels i.e. between €50 and €100 per tonne above those tabled. However, no deals have been closed as yet. This is creating some confusion in the market. Stockholders inventories have been coming down but still remain relatively high, even though some may lack products in specific dimensions. This could cause bottlenecks when buyers start to order again for January deliveries.

In Italy, local mills have lowered prices once again in order to combat competitive offers from third country importers. However, very few transactions are actually taking place. Because of this, prices are difficult to assess. Many manufacturing plants are closing from mid December to mid January because of a lack of demand for their products. This began with the hard hit auto sector and has now spread to other industries. Steel suppliers are trying to counterbalance this reduced consumption by implementing big output cuts. The destocking that remains necessary before companies begin to reorder is not happening because sales are virtually zero.

The weakness of sterling against the US dollar and the euro has reduced the inflow of imports into the UK. Domestic mill prices for forward orders are rather notional at the moment as relatively high stocks are preventing distributors from reordering. Spot values continue to tumble. Competition at the service centre level is fierce and resale prices are declining fast for most products, although some grades/sizes are stronger because of a lack of availability. Consumption is weak. The severe restrictions being imposed by the credit insurance sector are adversely impacting business activity, with everyone in the supply chain being affected.

The decline in market conditions in Belgium is quoted as "very fast and very aggressive". Prices are still being marked down. Many end-users are cancelling steel orders as their own customers withdraw contracted business. Distributors have plenty of material, probably enough to see them through period one 2009. Resale values are very cheap. Spanish demand remains low as stocks stay stubbornly high. Mills report cancellations of existing orders. In general, inventories at distributors are adequate for present sales levels but some holes are appearing for particular sizes/specifications.

We would concur with MEPS view on the current state of the market. It's amazing that whilst spot prices are collapsing, the European steel producers are largely refusing to quote discounts on prices even for the first quarter on forward orders. We even know of instances when mills are asking for substantial increases, that are unsustainable in this current market. We wrote back in early  November that they must act on prices, and they are still prevaricating.

Original MEPS article

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