End-user demand for flat products remains weak and the traditionally slow summer season is approaching. 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 still lack the confidence to order significant tonnages on such comparatively long delivery lead times, bearing in mind the woeful state of real consumption.
In Germany, Salzgitter plans to implement a price rise of €20 per tonne from July 1, citing a noticeable pick up in order intake due to inventory reductions. Lead times have in fact extended slightly to five/six weeks. Some purchasing is taking place but the majority of this is customers looking for small amounts of particular qualities/dimensions. There is virtually no buying to rebuild inventories. It is difficult to establish an indicative price level because the producers are dealing with each enquiry on an individual basis. Mill stocks are down but the steelmakers have tonnage that was rolled to order and is still awaiting call-off by the client. Service centres continue to lose money on resale prices. The mills' integrated distribution networks are blamed for failing to support their owners' moves to lift values because of their aggressive sales techniques.
As demand remains weak in the French market, producers have been struggling to implement price rises. Nevertheless, values seem to have reached the bottom. However, buyers feel that further hikes will be limited to the level of real consumption. Generally, stocks are said to be at normal levels but there are disparities between warehouses and products. Strip mill prices have moved up by €10/15 per tonne but poor sales hamper further increases.
In Italy, the mills report that any significant recovery is still some way off. They continue to work at vastly reduced rates of capacity utilisation. The market is flat and the situation uncertain. There are tentative moves by some steelmakers to boost prices but buyers believe there is no likelihood of success at present. Stock levels at the service centres are in surplus. Importers are putting up their quotations but this does not reflect any improvement in Italian demand.
The effects of the mills' severe output cuts are starting to become apparent in the UK, although tighter supply has yet to translate into positive price movements. Underlying demand remains poor but buyers are more confident to order forward, albeit only modest tonnages, mainly reflecting the need to plug holes that have appeared in their inventories. The consensus view is that prices have now sunk as low as they can get, with the possibility of marginally higher figures during the third quarter. Resale values in several instances are still not realistic, despite better adjusted stocks.
There are conflicting signals in the Belgian market. On a positive note, mill prices have stabilised, service centre inventories are becoming more in line with demand and credit insurers are less aggressive than earlier in the year. However, real consumption has not recovered, with some end-users seeing very little work in hand beyond August.
Suppliers in Spain report that enquires have stepped up over the last four weeks. Consumers are getting seriously low on stock and therefore require more material from the distributors. Service centre inventories are at a more comfortable tonnage now and should be harmonised with the reduced level of sales by the beginning of September.