Seasonal Reduction In Activity Negates The Impact Of Capacity Cuts

18th December 2019

Western and northern European producers idled several blast furnaces in recent months, thereby reducing supply in the regional market. Nevertheless, amidst subdued demand and seasonal factors, such as year-end inventory minimisation, few buyers were receptive to the mills’ proposed price increases for strip mill products. In fact, in most of the countries surveyed, transaction values, for flat products, continued to decrease, slightly, in December.

The unresolved future of the Ilva plant, in Taranto, Italy, is leading to reduced supply of hot rolled coil in central Europe. Market participants in Austria, consequently, foresee the possibility of price increases. Underlying demand is weak, in Denmark. In Sweden, end-user activity is declining, from its previous, very satisfactory state. In Finland, demand is poor and alternative suppliers are making competitive offers, in an attempt to gain market share. Distributors and service centres are beginning restocking programmes, in the Netherlands. Delivery lead times, from European mills, are shortening, in Norway.

Hot rolled plate prices continue to slide, in Denmark. Inventory levels are high. In Sweden, sales volumes are expected to fall significantly, in 2020. Russian mills are offering material at substantially less than local market figures, in Finland. In the Netherlands, the agricultural equipment sector is depressed, while shipbuilding activity is stable, at a low level. A wide range of prices, from regional producers, is reported, in Austria. Sales volumes decreased, recently, in Norway.

Cold rolled coil inventories, in the automotive supply chain, are declining in Denmark. Import offers are similar to local figures and, therefore, not attractive. In Sweden, reduced contract prices are predicted, for the first quarter of 2020. Purchase tonnages are fair, in Finland. Buyers, in the Netherlands, consider recently announced price hikes to be excessive. Austrian service centres are trying to minimise their stock levels. Order quantities are depressed, in Norway.

Sales volumes of coated sheet and coil are adversely affected, in most of the territories surveyed, by reduced automotive production in neighbouring countries. No early upturn is forecast, in 2020. Austrian buyers report that decreased supply from the Ilva plant, in Italy, may contribute to inflationary pressure on regional prices.

Drawing quality wire rod suppliers secured small price increases, in Sweden. Rising scrap costs influenced the change. In Finland, automotive activity is subdued but overall sales volumes are satisfactory. In all the other countries surveyed, selling values rose.

Most regional producers of medium sections and beams filled their order books for December rollings. Increasing transaction values, in most countries, were influenced by a combination of tightening supply, stretching delivery lead times and growing mill input costs. In Austria, beam producers tried to lift their selling figures, without success. In Norway, prices, initially, fell, but, subsequently, rose above previous levels.

The expected exhaustion of the EC safeguarding quota, for Russian reinforcing bar, could buoy local prices. Growing delivery lead times and supply shortfalls are reported, in Finland. Danish prices picked up but the positive trend may be limited by seasonal, low activity. Swedish end-users are placing orders for small quantities only. Construction and infrastructure work is limited, in the Netherlands. Scrap costs recorded a steady increase, in Austria, but demand is insufficient to lift rebar values at the same rate.

Merchant bar values in Denmark were, mostly, unchanged, in December. Sellers, in Sweden, were unable to secure price increases. Finnish OEMs are reasonably busy. The domestic market, in the Netherlands, has been quite stable, in recent weeks. Prices, in Austria, remain unchanged. In Norway, some deals were reported at increased values, but most were agreed at rollover prices.

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