/Rusmet.ru, Victor Tarnavskiy/ Lately some European metallurgical companies announced the intention to increase their prices for July and even June shipments. These offers have not caused noticeable consumers’ responses and were cautiously faced by the market specialists.
Indeed, in May the prices for flat steel, fist of all, for sheet, in Europe continued to decrease. Many traders announce, as before, about excessive stockpiles. Steel products demand in last two or three weeks somewhat grew, but only from end users other than distributors. General sales volume is still low.
In the middle of May European metallurgical companies offered HRC mainly at 310-330 åâðî per ton EXW; in Eastern Europe minimal price was 290 åâðî per ton EXW. CRC price in Western Europe approached 400 euro per ton EXW; domestic steel sheets were offered at about 370-410 euro per ton EXW. Imported products on CIF terms are, as a rule, by 10-20 euro per ton cheaper. But it did not contribute to its demand growth.
EU, as well as USA, lately substantially decreased steel products purchases volumes. According to Eurofer company, in April European companies applied for import licenses for 1.185 tons of steel which was by 22 % less than in March and by 56 % less than in April 2008. This fall can be explained by the fact that the majority of the buyers now need to purchase small volumes in short periods and such purchases are easier to make from domestic manufactures.
Before European market attracted the suppliers from all over the world due to stable demand and high prices; now the share of the nearest neighbors of EU is growing. In April 36.4 % (in tonnage) licenses were requested for steel import from Turkey, Russia, and Ukraine; China decreased this factor from 360 thousand tons in April 2008 to 104 thousand tons.
Freight tariffs growth also contribute to economical self-efficiency of the Europe - Middle East region. In the conditions of prices equation in EU and Eastern Asia (about $420-440 per ton CFR for HR steel) it is not profitable enough for Japanese, Korean, and Chinese companies to search sales markets in EU. But CIS exporters due to their relatively low prices ($345-385 per ton FOB for HR steel) keep their competitive ability in both regions.
All these trends play the game of European metallurgists. Supply volume in European market is not high, and it is to decrease even more due to further production fall. According to some European traders, lately it got very difficult to find products at acceptable prices despite the fact that small metallurgical companies often consent in price questions. At the same time the possibility of the change of domestic products to import is rather limited now.
Perhaps, European manufacturers overleap announcing future prices increase when there are no objective reasons in the market. However, thus they make definite expectations in the market. Though the consumers are not likely to perceive steel products prices growth in June, a month later, they will not object.
Generally, it seems that flat steel prices jump in the beginning of Q3 will touch not only Europe but also Eastern Asia and even USA. This surely increases metallurgists’ chances for success.
Russian and Ukrainian exporters in nearest future should not rely on substantial demand increase from EU. They will have to wait for excessive distributors’ stocks to run out which is unlikely to happen before autumn. But prices increase in June is quite real.