The relentless upward movement in EU prices continues. Customers are obliged to accept the new higher third quarter values demanded by local producers. Prices of imported strip into Europe are still increasing this month, although less material is entering the region. There is relatively little steel from China due to the pending anti-dumping investigations. Output from domestic mills for July/September deliveries appears to be restricted.

Demand from end-users in Germany has slowed slightly because they are not sure they can pass on their increased costs to their customers in a weakening economic climate. Although service centres are making good profits at present, they are keeping stocks down. Third country imports are available, albeit not always at attractive prices. Buyers are not keen to place orders for deliveries so far ahead, when they feel current prices are probably at their peak for this cycle.

In the French market, inventories are quite low and not expected to recover in the near term because of a lack of overseas availability and restricted supply from domestic sources. Prices continue to increase for third quarter deliveries. Sales are only average, although demand from the auto sector has improved.

Strip mill prices have registered further sizeable rises in Italy this month and the trend is expected to continue to the end of the summer as import volumes drop away. As hot rolled coil prices escalate, they are pushing the rest of the flat products with them. Stocks are depleted at present because customers are reluctant to risk losing money if the price trend goes into reverse.

Corus, of the UK, has stated that it will lift basis prices for quarterly contracts in mainland Europe by €130 per tonne from July 1. So far, no official announcements have been issued concerning the local market. Sales at home are lacklustre. However, customers have fewer options on supply because of a lack of third country imports and much smaller quantities than usual on offer from other EU suppliers. There has been no speculative purchasing ahead of the period three price advances. Negotiations are underway and it is clear that prices will rise markedly. Our tabled figures are the results of early deals and values could go higher as more business is concluded.

Steel consumption is still quite good in Belgium, although the domestic appliance sector is starting to show signs of weakness. Market players are concerned that the second half of the year could prove to be more difficult as prices may have almost reached a level that the market can no longer support. Stocks at the service centres are on the low side of normal due to tight credit, delayed deliveries and mill restrictions on supply. Distributors are able to pass the higher mill prices to their customers. End-users are keeping inventories to a minimum. Third country material is absent and the European mills are reported to be selling large tonnages overseas.

In Spain, general demand is stable. However, the auto sector is still reducing order volumes and construction activity is particularly weak as ongoing projects are completed and new ones postponed or cancelled. Availability from European mills is constrained, with smaller clients suffering the most.

UK based MEPS said that the relentless upward movement in EU prices continues and customers are obliged to accept the new higher third quarter values demanded by local producers. MEPS added that “Prices of imported strip into Europe are still increasing this month, although less material is entering the region. There is relatively little steel from China due to the pending anti dumping investigations. Output from domestic mills for July September deliveries appears to be restricted.”

MEPS said that “Demand from end users in Germany has slowed slightly because they are not sure they can pass on their increased costs to their customers in a weakening economic climate. Although service centers are making good profits at present, they are keeping stocks down. Third country imports are available, albeit not always at attractive prices. Buyers are not keen to place orders for deliveries so far ahead when they feel current prices are probably at their peak for this cycle.”

MEPS said that “In the French market, inventories are quite low and not expected to recover in the near term because of a lack of overseas availability and restricted supply from domestic sources. Prices continue to increase for third quarter deliveries. Sales are only average, although demand from the auto sector has improved.”

MEPS added that “Strip mill prices have registered further sizeable rises in Italy this month and the trend is expected to continue to the end of the summer as import volumes drop away. As hot rolled coil prices escalate, they are pushing the rest of the flat products with them. Stocks are depleted at present because customers are reluctant to risk losing money if the price trend goes into reverse.”

MEPS said that “Corus has stated that it will lift basis prices for quarterly contracts in mainland Europe by EUR 130 per tonne from July 1st 2008 but so far, no official announcements have been issued concerning the local market. Sales at home are lackluster. However, customers have fewer options on supply because of a lack of third country imports and much smaller quantities than usual on offer from other EU suppliers. There has been no speculative purchasing ahead of the period three price advances. Negotiations are underway and it is clear that prices will rise markedly. Our tabled figures are the results of early deals and values could go higher as more business is concluded.”

MEPS added that “Steel consumption is still quite good in Belgium, although the domestic appliance sector is starting to show signs of weakness. Market players are concerned that the second half of the year could prove to be more difficult as prices may have almost reached a level that the market can no longer support. Stocks at the service centers are on the low side of normal due to tight credit, delayed deliveries and mill restrictions on supply. Distributors are able to pass the higher mill prices to their customers. End users are keeping inventories to a minimum. Third country material is absent and the European mills are reported to be selling large tonnages overseas.

MEPS also said that “In Spain, general demand is stable. However, the auto sector is still reducing order volumes and construction activity is particularly weak as ongoing projects are completed and new ones postponed or cancelled. Availability from European mills is constrained, with smaller clients suffering the most.”

Steel producer Corus, part of industrial giant Tata, said it is raising base prices for quarterly strip steel contracts in continental Europe.

Corus Strip Products will increase prices by a minimum of 130 euros per tonne from July 1, Corus said in a statement.

The group blamed tight market conditions and ‘extreme cost increases for raw materials’.

‘At the same time, Corus Strip will enter into discussions with its customers to discuss the consequences of the extreme cost increases in relation to current annual contracts,’ the statement said.

I understand in the UK, that the price increases are between £130 for hot rolled up to in excess of £200 for Galvanized.

EU prices continue to increase. The mills are insisting that they must go up again in period three to reflect the rising costs of production. The initiatives are likely to be accepted due to a lack of any competitively priced alternatives. Import volumes into Europe remain very low and this is contributing to already limited availability from local steelmakers. The soaring prices are clearly not driven by demand, which is relatively modest. Inventories, generally, are not growing because it is too costly to finance steel stocks.

The German mills are talking of hefty price rises on strip mill products in the third quarter. Service centre inventories of commodity grade coil are adequate with some buyers refusing to place further orders at present. However, availability of the higher specifications appears to be more constrained and some gaps are appearing. Real demand is no better than “normal”. The strong Euro continues to have a negative effect on exports of manufactured goods.

In France, sales of coil are described as “average”, although some improvement is noted in the automotive sector, as one of France’s two major car manufacturers is ordering extra material on top of its usual annual requirements. Producers are said to be considering a basis rise of at least €100 per tonne. Under current market conditions, prices are not open for negotiation so buyers are placing business not knowing the final cost. They complain that they cannot get enough tonnage.

Italian values have continued to move up, albeit at a slower pace, despite fairly flat underlying consumption. Now that the new government is in place, customers feel that public investment could grow in the longer-term but no immediate improvement is expected. Import pressure is modest, leaving buyers with little or no alternative but to accept higher prices from local producers who are using inflated raw material costs to justify their demands. Suppliers are talking of further hikes next month.

UK consumption is far from robust. Even the auto sector is softening. Nevertheless, steel selling values for the remainder of period two continue to move up as availability is poor. Traders’ stocks are shrinking rapidly as it becomes increasingly difficult to secure new supplies. Service centre inventories are also depleted because they cannot afford to build them up, partly due to limitations on credit. Shortages are beginning to occur. Some distributors are struggling to recoup the mill increases from end-users.

In Belgium, the manufacturing and construction sectors are performing well. Inventories are low at the consumers because of the high costs of finance. Service centre stocks are described as “reasonable but not excessive” with holes appearing for certain grades/sizes. So far, distributors are recovering the higher prices they are paying the mills.

Spanish demand is stagnant at best and expected to decline further because of the generally poor economic situation. Meanwhile, prices continue on an upward trend, amidst a lack of credit availability. Customers are only buying what they need and are keeping inventories to a minimum.