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European demand is quiet, partly for seasonal reasons, as many companies require year-end stocks to be as low as possible. In addition, the new automotive testing procedures have significantly reduced fourth quarter steel demand from that sector, albeit, probably, temporarily.
Existing inventories, particularly at the service centres have been sufficient due to the arrival of overseas material, ordered earlier in the year, allowing buyers to postpone purchasing decisions until the future pricing trend becomes clear.
Consequently, European mill order intake has declined; considerably with domestic delivery lead times are no longer extended.
Order placement slowed, in Germany, in November, particularly for auto-related applications. Buyers were reluctant to procure material for stock purposes owing to year-end financial considerations and end-users were asking distributors for discounts.
Inventories at the service centres were plentiful, enabling buyers to adopt a ‘wait and see’ attitude. Also, import offers were more competitive than in recent months and domestic strip mill product prices suffered further negative adjustments, in November.
Currently, activity on the French strip mill products market has been slow, with basis values weakening, as a result. Meanwhile, EU suppliers continue to pursue price rises as negotiations for annual and half-year contracts, with the car industry, are underway.
Automotive demand for 2019 is expected to pick up at the beginning of next year. But in the general market, selling figures declined further, in November.
A sharp reduction in new orders led to a further fall in Italian manufacturing output, in October. Economic concerns, plus the government’s confrontation with the European Commission, resulted in sluggish steel demand and downward price pressure on strip mill products. Inventories at the service centres are high, as end-users purchase only small quantities.
Resale margins are poor with imports competitive as Turkish, Indian, Chinese and South Korean suppliers return to the market. Should their offers become more attractive, orders may be placed for 2019 arrival. At the moment, most companies are trying to destock before the year-end.
Activity in the UK’s manufacturing sector fell, in October. The country’s impending EU exit is causing growing uncertainty in business circles. Subdued consumption, by the vehicle manufacturers, is problematic for steel suppliers. Strip mill product basis numbers softened further, due to poor demand and pressure to match import offers, particularly from Turkish sources.
Belgian market values weakened further, in mid/late October. Since then, stabilisation was noted. Buyers believe that increases are unlikely before the end of the year, as the economy slows while some mills still have availability for orders to be produced in the final quarter.
Many distributors are only purchasing replacement material, as they postpone buying decisions as they wait to see how prices will evolve. Much will depend on third country imports and pressure from southern Europe.
Spanish manufacturing continued to expand, during October. In the steel market, EU producers adjusted prices downwards, for January 2019 deliveries. The move was driven by the continuing decline of import prices, for shipments into the beginning of next year. The market is quiet, as buyers monitor new developments. Many are slow to purchase as they have sufficient material, either in stock, or already on order.
