Strip mill product basis prices were stable in most northern European markets, in December, according to the latest edition of MEPS European Steel Review. However, Italian figures weakened and Spanish buyers accepted a small increase. Regional producers continue to promote further rises, in order to achieve their new target values. They remain confident that these can be implemented in early 2018. An ongoing lack of attractive third country offers should help to support the producers’ proposals.

Demand slowed because of the approaching Christmas holiday. Moreover, many companies reduce their inventories ahead of their financial year-end. Service centre buyers were loath to pay more as their resale values do not always cover, even current, replacement costs.

Near-record growth was noted in Germany’s manufacturing sector, in November. The steel sector, however, was quiet, in early December, with demand likely to remain subdued until after the new year. Distributors are living off their inventories and not looking to rebuild their stocks until 2018. Trade defence measures have led to the curtailment of import volumes. Moreover, prices were uncompetitive, in December.

Strip mill product prices were stable, in France, this month. Buyers believe that the trend will be slightly positive at the beginning of next year. Delivery lead times are extending and limited quantities of material are available. Activity slowed, in late November, particularly in the distribution sector.

Italy’s manufacturing sector recorded substantial improvement during November. Nevertheless, steel demand slowed considerably, ahead of the Christmas vacation period, undermining mills’ efforts to retain November price levels. Suppliers continue to talk of increases for first trimester 2018 business. Service centres report that a number of their customers are only purchasing small quantities at any one time, suspecting that prices may go lower. Import opportunities are few.

UK sales of strip mill products are quite slow, at the moment. Customers are holding off making purchasing decisions for as long as possible as they try to ignore the steelmakers’ price hike proposals. Distributors report that their resale values are insufficient to meet the increases suggested for the first quarter of 2018. Inventories at the service centres are down slightly from those in late summer. Port stocks are also reduced.

Resistance from buyers, regarding further rises for January/February 2018, was noted in the Belgian market, in December. Demand is relatively slow due to the approaching Christmas holiday but underlying consumption remains good. Service centres are required to reduce stocks before the year-end. This resulted in a number of low resale offers.

The rate of growth in Spanish manufacturing output grew for the third successive month, in November, reaching its highest point since May 2015. Steel demand is reasonably good. In December, large distributors settled for their January/February 2018 deliveries, conceding a rise for strip mill products. Resale values continue to be problematic. The weakness of the US dollar has made third country import offers more competitive, of late.

Source: MEPS – European Steel Review – December 2017 Issue