Strip mill product basis prices continue to move up in northern and southern Europe, in February. Regional producers propose further rises, in order to achieve their new target values. Imports are playing only a minor role in the market, at present, as a result of trade defence measures and unattractive quotations from third country suppliers. Delivery lead times from domestic steelmakers have extended, although no shortages are reported. Underlying consumption is strong, in most countries. Moreover, distributors are restocking. Nevertheless, buyers remain cautious.

In Germany, domestic mill delivery lead times continue to lengthen. Order intake is good, certainly through the first half of 2018. Service centre inventories are reasonable. Imports from third country sources are available but their prices are too high to be competitive. Recent business was negotiated at figures above those reported in January, but not yet at the new target levels set by the domestic mills.

End-user activity is still at a good level, in France, even though purchasing in January started slowly. Distributors are now well stocked, as significant quantities of material were ordered at the end of last year, some of which is still being delivered. Mills implemented price rises towards the end of January and are now demanding more. Activity is strong in all steel-consuming sectors, with delivery lead times stretching to May/July. Import offers are currently in line with domestic prices.

Italy’s manufacturing sector enjoyed a strong start to 2018, registering the highest growth in output since early 2011. Steel inventories are reduced. The improvement in purchasing is supported by a recovery in real demand and a degree of restocking. Expectations for the first half of 2018 are good for both the auto and mechanical engineering sectors. Construction activity shows only slight progress. Flat product prices escalated, in February. Supplying mills are full, or overbooked. Delivery delays are reported and lead times have rapidly lengthened. Attractive third country import offers are scarce.

Manufacturing growth slowed, in the UK, in January. Inventories at the service centres are reducing and port stocks are at their lowest for several years. Third country quotations are limited and those that do exist continue to be more expensive than domestic offers. The mills implemented higher basis prices for second trimester deliveries. Service centres complain that resale values are not satisfactory, even on steel procured before the hike. Consequently, they only purchase for their immediate needs.

Belgian demand is brisk and customers are optimistic regarding future business levels. Domestic steelmakers pushed, successfully, for price advances for deliveries at the beginning of the second quarter. Competitive offers from third country suppliers are scarce. Quantities from European mills are also limited, with delivery lead times extending into the second trimester and beyond. Buyers expect values to be even higher when the next round of deals are finalised. Resale prices are also climbing.

Business conditions in the Spanish manufacturing sector continued to improve markedly at the start of 2018. Distributors of strip mill products are busy. However, it is still a struggle for them to recover the escalating ex-mill costs from their customers. In February, buyers settled orders for their second quarter deliveries at higher prices than in the previous month. As European basis numbers continue to move up, a number of companies are starting to consider buying imported material.

Source: MEPS – European Steel Review – February 2018 Issue