It appears that with weakening in domestic market in India and China, despite murmurs of scarp and billet crash at Black Sea and Turkey, Europe is regaining its old age position of best paying market
European long products mills and rerollers have not reacted to scrap price decrease with any parallel price decrease in finished longs. None of them seems to take in smallest consideration such move as most of them have been able to feel up order books till end of May or beginning of June as result of the recent and sharp price increases. It seems that they will be more flexible when negotiating eventual important orders, however without modifying their price list at all. This should possibly lead to a consolidation of the market and give them the opportunity of looking for new price increases as soon as Turkish Mills will come back and thus scrap prices should again pick up.
On flat products the situation in Europe continues to be quite odd and contradictory. To a strong and determined positions of the mills that are defending the price levels so far conquered is responding a general extremely worry and conservative feeling of the customers and of the market in general, as all buyers and end users are very skeptical about prices being able to remain at same level during next period. They are based on the fact that consumption and demand are still extremely weak which they can verify and "suffer" on the day by day job.
As a consequence, basically all stockiest and distributors, have decided to de stock as much as possible and keep a "wait and see" attitude.
It is learnt that Italian buyers are all but trying to decrease as much as they can stock levels. All steel service centers and distributors have finally segregated the idea that prices will not be able to keep present pace and that a soon decrease will take place on or before holiday period. Nobody is committing and booking orders for June shipment from long distance origins as this would lead to an arrival after holiday. They are simply looking for assorting their stock with the minimum necessary, searching relevant products within a max of 2 weeks delivery time period. Therefore origins like Russia, Ukraine, Turkey and Egypt are the most wanted.
On the other end, some Italian domestic producers like Marcegaglia are offering September / October delivery for CRC as declaring to be in shortage of HRC and producers like voestalpine are denying even the smallest increase of quantity on already booked orders.
Signs are contradictory as it''s emerging quite clearly a different situation between North and South Europe whereby the first one seems to be in a much better shape with a positive trend.
On the other hand, availability from import is quite scarce with offers generally much higher than affordable levels. It is reported that the prices of hot rolled plates to North Europe are drastically jumping with offers from China becoming almost competitive. Traders are actually offering Prime Plates from 2nd tier Chinese Mills at prices ranging between EUR 600 per tonne to EUR 650 per tonne effective FOT Antwerp, depending on thickness and quality.
In South Europe HRP from China are offered at levels around USD 770 per tonne CIF FO base + extras with payment LC at 90 days from BL date. This is more or less equivalent to offers of North Europe but customers are quite reluctant to book at such levels, mainly because June shipment is leading to get plate availability for selling only by September which is too far and too unpredictable for committing. On the other hand also South Europe Plate producers are increasing prices which have recently reached the EUR 600 per tonne nominal levels with bookings remaining quite volatile and seldom.
On the other hand, domestic mills have apparently increased again prices that are now reaching as high as EUR 650 per tonne EXW for commercial quality S235JR and expect to further increase for June July deliveries.
However, demand remains low and buyers are booking only quantities strictly necessary to their inventories.
Exchange rate of EUR vs USD that has bottomed to 1.32, as a consequence of the Greek and other Euro countries critical economic situation, has worsened the conditions of the available offers from abroad.
Continuing the general economic situation remaining on present weak basis, we continue to believe that prices will have to be re adjusted as present levels are not in line with the social environment of many EU countries, where unemployment remains at quite high level without perspective of being reduced in the short period.