European steel market has played a stellar role in the revival of fortunes for global flat product prices after the winter holidays. The rally in prices of flat products had made the coffers of European mills ringing in its maiden rally since the onset of recession.
The Southern countries of Italy and Spain have shown vulnerability off late. The march of successive weekly increment has been stalled with a proclivity for marginal reduction. Buyers have been quick to sense this fading sentiment. This changed tact is evident with the emergence of several distressed cargo remnants from breached contracts, expired LC and traders with position cargo eager to liquidate it.
It is learnt that a lot of HRC from an Ukrainian Mill is now offered at USD 690 per tonne CFR FO Mediterranean port which is a significant climb down from the minimum price of USD 710 per tonne to USD 720 per tonne FOB declared early this week.
Domestic mills like Riva in Italy have failed to evoke response with new floor price of EUR 620 per tonne base with no takers as most of the distributors are opting to withhold purchase in this changed scenario.
The general economic situation of EU with the recent crisis in Greece likely to deepen by the impending danger of involvement of other countries such as Portugal and Spain are pushing all operators to an extremely conservative attitude.
The coming week will be critical for the shaping of trend. It is apprehended that the debacle in scrap and long product prices might just press the trigger in flat product as well. Moreover since stockists have already replenished their inventory might go slow on further buying as the outflow remains slow owing to lagging demand.