EU steel de­mand slows in Novem­ber

Business a.m. - - COMMODITIES & AGRICULTURE -

EURO­PEAN STRIP MILL PROD­UCT PRICES were re­vised down­wards, in Novem­ber. Cheap of­fers from Turk­ish sup­pli­ers are un­der­min­ing mar­ket con­fi­dence. Over­all, sen­ti­ment is weak­en­ing. Buy­ers fear that the global econ­omy is slow­ing down.

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.

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

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