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News

Weak demand depresses Northern European steel prices

MEPS (International) : 25 October, 2012  (Special Report)
Steel market activity in northern Europe remains very weak and ex-mill selling values slipped significantly for October. Buyers are cautious, anticipating the possibility of further price reductions and reluctant to carry any more inventory than is absolutely necessary.

According to European Steel Review Supplement, few sectors in Northern Europe that consume strip mill products are busy. Car manufacturing in Germany and Sweden, which had remained stronger than many other industries since the financial crisis, has slowed in recent months. Local producers face competition from cheap offers from southern and Eastern Europe, while the strengthening of the euro against the US dollar has made imports from outside Europe more attractive, despite the long delivery lead times. The MEPS Nordic Average Transaction Price for cold rolled coil decreased by 4.0 percent, this month.

The market for hot rolled plate is even weaker. Some consuming sectors are quite busy, especially offshore applications destined for the North Sea. However, large users of commodity grade plate, such as yellow goods manufacturers, have seen their business decrease substantially. Project work is being held back by credit tightness. The MEPS Nordic Average Transaction Price for hot rolled plate dropped by nearly 6 percent, in October.

Infrastructure and other construction projects have provided some demand for long products recently. On the other hand, manufacturing in Europe has declined. Moreover, steelmakers from countries such as Poland and Ukraine are offering material at competitive figures. Scrap prices have fallen and are likely to slide further in the near term. These factors have resulted in significant reductions in long products transaction values, this month.

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