The EU market remained quiet two weeks into the New Year. Many companies took extended holidays because of the poor economic climate and the severe weather hitting several countries has also served to dampen activity. Domestic producers are looking to implement strip mill price rises during the first and second quarters, mainly on the back of anticipated higher raw material costs.
In Germany, end-user consumption shows little sign of recovery but there has been a small pick up in order placement which really reflects a degree of restocking. This has allowed the mills to push for price hikes. They are also talking about further advances for second trimester deliveries. Market players are not convinced that this is feasible.
French coil values are relatively stable for now but buyers believe spot prices are about to increase. Producers are mulling fairly significant rises for the second quarter. There has been a slight improvement in apparent demand due to low stocks. Distributors need to fill up their inventories again. However, there is no upturn in real consumption. Moreover, the freezing weather has slowed down activity.
In Italy, the mills have lifted values citing higher iron ore and scrap costs. They are looking for more for March deliveries but the amounts are not fully defined as yet. Underlying demand is showing some small positive signals. In addition, low stock levels are forcing buyers to place new orders. However, distributors are wary of purchasing too much material at the new figures for fear that end-users will not be able to cope with the additional expense. There is still serious competition for sales between service centres.
The first couple of weeks of the New Year were quiet in the UK, partly because of the atrocious weather. Strip mill basis numbers for early first quarter business have more or less been rolled over from December but there is upward cost pressure on the mills. Customers expect them to try to boost prices by the end of period one, despite a lack of any real demand. If they succeed, the question on the lips of distributors is "can we pass on the rise to consumers or will our margins be squeezed even tighter?". There is no excess stock in the supply chain and very little import threat. Attractive offers from third country sources are virtually nil. They are quoting at least £40/50 per tonne more for May/June deliveries, which is a significant mark up on fourth quarter offers.
Market participants in Belgium believe prices have reached the bottom but question whether current demand can support the increases being talked about by producers, especially as the integrated distributors continue to sell so aggressively. Inventories are low at mills and service centres. Delivery delays are likely to lengthen because of the extended stoppages over Christmas/New Year. There are virtually no third country imports at present. Some end-users are suffering severe financial problems.
Spanish activity is slow as customers try to assess the situation after the holidays. Stocks are quite depleted but there is no speculative purchasing due to the grim nature of consumption. Automotive is the only sector showing signs of any improvement, albeit only minor. Non-EU import values firmed up pre-Christmas and are now more expensive than current quotations from domestic steelmakers.