European Steel Mills Face Slow Market from Lack of Consumption, Orders and Confidence

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--In Europe, steel mills are so short of business that their determination to lift prices appears to be crumbling. The flat products market is experiencing exceptionally quiet conditions, which are leading to renewed downward pressure on basis values. With consumption showing no signs of improving, end users and distributors are reluctant to place forward orders of any significant volume. Third-country offers have not sustained their appeal as the euro has started to weaken, according to MEPS (Sheffield, England).

German mills continue to see free capacity for the second quarter of the year as order intake is slow. Buyers who are negotiating expect to pay less at the conclusion of deals. Service centers are keeping inventories as low as possible, as they have little confidence in the performance of the market, in terms of both price and consumption.

In France, order book and completion time are short, resulting in weak demand from distributors. The auto sector's steel consumption is down, and activity in the rest of industry is stable but modest.

In Italy, market conditions are tough in an uncertain political scenario, with few buyers and weak final demand. Distributors are only sourcing limited quantities as they cope with a lack of sales opportunities and client payment issues.

In the U.K., the exchange rate is favorable for domestic producers. Some of the proposed $45-per-ton price increase that was announced in February has been secured. But service centers are keeping inventories low a resale values are increasing as quickly as mill figures.

In Spain, there is no improvement in demand, with service centers struggling under minimal profit margins, with every available order being fought over. End-users say that they can virtually put their business out to tender if they have any to place.

For related information, see February 26, 2013, article - European Steel Faces 'Bleak' 2013.

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