Polish and Czech steel prices continue to decline in June

MEPS recorded reductions in the price of steel products in Poland and the Czech Republic, in June. Market activity is slowly recovering but not significantly enough to prevent further erosion in transaction values, over the past month.

In Poland, coil buyers are purchasing cautiously due to uncertainty surrounding future demand. Sales to the automotive and white goods manufacturers are growing. Nevertheless, they remain far below pre-pandemic levels. New construction projects are starting up. However, delays in large schemes are occurring.

Despite ongoing production cuts, mill delivery lead times remain short. Inventory levels at steelmakers and distributors remain elevated but are gradually being reduced.

A weakening in demand for plate products is noted, in Poland. Local stockists, with cashflow problems, are quoting very competitive resale prices in an attempt to secure order volumes. Regional plate producers are finding it difficult to fill their rolling programmes.

Czech market under pressure

Coronavirus-related lockdown restrictions have been eased, in the Czech Republic. Sentiment is gradually improving, as more companies reopen their factories and increase operation rates. Nevertheless, a number of local steel buyers are looking to cancel or renegotiate orders placed prior to the crisis, as a result of the substantial reduction in spot market prices witnessed in recent months.

Domestic transaction values are under downward pressure, due, in part, to the soft market conditions in neighbouring countries, particularly Germany. The weakness in the German automotive industry resulted in substantially reduced order books at European steel producers. Regional mills are still operating at low levels of capacity utilisation, as they attempt to deplete their high stock levels, which built up during the height of the Covid-19 pandemic.

Stimulus measures by national governments and the European Union may boost steel demand, in the second half of 2020. However, supply chain participants, in Central Europe, fear that a second wave of coronavirus infections could derail any short-term market recovery.