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October 25, 2017


The MEPS EU flat product price will average approximately €620 per tonne, in 2017. This represents the highest annual average figure since 2011. Steel prices commenced this year at a high level. Following a downturn in the second quarter, selling figures recovered during the summer.

The European market for strip mill products continued to perform satisfactorily, in October. Consumption remained strong, particularly, in the northern regions. According to the October edition of MEPS European Steel Review, basis values are relatively stable, with a number of minor upward adjustments. Major mills are still pushing for a hot rolled coil minimum figure of €560 per tonne in northern Europe and €540 per tonne in the south. Although this target has still to be reached, reduced availability, resulting from trade measures, continues to support the steelmakers’ proposals.

In September, German manufacturing recorded its strongest growth performance for more than six years. Underlying steel consumption remains robust, with both auto and construction companies requiring significant quantities. Nevertheless, basis values were unchanged, in October, failing to reach the target set by the domestic mills. Despite a lack of competitive import opportunities, buyers relate that availability from domestic sources is adequate.

French activity, in general, is at a good level, driven by vehicle manufacturing and construction. However, the sheet processing sector is little changed. The flat products market was quieter during early October, when fewer price rises were noted, than of late. Producers are pushing for further hikes but buyers are becoming more sceptical.

In Italy, official domestic basis prices remained static but, as mill order intake slowed, in early October, local steelmakers began to offer modest discounts for large purchases. Inventories at the distributors remain stubbornly high. This is reflected in poor resale margins. Dealers hope that most of this material will be cleared by the end of the financial year. Import competition waned with the introduction of new antidumping duties on hot rolled coil. Indian material is on offer at similar prices to EU domestic supply. So far, the industrial unrest at Ilva has not compromised delivery schedules.

UK construction activity fell sharply, in September, with commercial building and infrastructure particularly hard hit. However, the outlook for the manufacturing sector remains positive. Nevertheless, service centres report that demand from end-users is less buoyant than usual for this time of year. Resale margins continue to contract. Inventories linger at undesirable levels, despite modest reductions. Producers, noting a decline in recent transaction volumes, are waiting before issuing target prices for the first quarter of 2018.

A number of small price advances were noted in Belgium, compared with September’s numbers. Buyers feel that the market will stabilise at the current level, although the steelmakers are claiming higher figures for next year. Steel demand is healthy. However, the inflated mill prices are proving problematic for a number of distributors who are struggling to pass on the increases to their customers.

Growth in the Spanish manufacturing sector picked up, in September, reversing the recent trend. In the flat products steel market, basis values remained generally stable, in October, following the substantial rises in the previous month. Demand on the local mills is unlikely to improve to any great extent, at present, as huge quantities of imported material, ordered when overseas prices were very competitive, have still to arrive. New import quotations are much more expensive than previous offers. Although service centres are relatively busy, many have not succeeded in recouping the full amount of recent mill hikes.

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