According to the report announced by Eurometal (Association of European steel, tubes and metal distribution) in October, distributors' sales were at low levels in August due to the holidays in Europe. Also, according to the data, distributors' sales were at nineteen percent lower in August compared to the same month in 2008. Sales volume of the steel service centers that sell flat steel products in August 2009 have decreased by 24 percent lower year on year basis.
Despite the fact that the capacities of the producers in Europe have decreased by 32 percent compared to the last year's August, producers' shipment periods are shorter now. It is mentioned that if the capacities show increase delivery periods will be shorter with current demand levels. Besides, Eurometal thinks that stock levels are still at too high levels and for this reason, destocking process will likely continue in the fourth quarter of the year. It is also mentioned that the general two-months sales period of the steel service centers that sell flat steel products have now become three months from July to August. This fact is seen as an evidence to indicate the tightening in flat steel demand in Europe.
Looking at the Euro zone PMI (Purchasing Managers Index), it is observed that there have been increases from February 2009 to October.
As it can be seen on the table, PMI registered lowest levels in February, whereas it showed positive movement again in the third quarter. However, figures of PMI in the first quarter of 2008 cannot be reached yet. While positive movement continues in PMI, it is expected that Europe will grow up by + 1.2 percent in 2010.
While the economies of some countries such as China, Egypt and Indonesia have grown positive in 2009, European countries' economies have significantly shrunk. Thus, steel demand in China and India has been very strong compared to Europe. However, Chinese stockists and producers have started to give attractive export offers on the back of weakening demand in their own domestic markets.
Looking at the flat steel price levels in Europe in general, although no price downtrend has been observed in the producers' prices, it is observed that the offer prices from the other countries such as China and CIS are registering downtrend. Purchase activity has slowed down under the influence of China in particular. It is expected that China will return to the market after the National Day holidays (October 1-8) and will likely be competitive in Europe with its hot rolled and galvanized products in particular. It is heard that international trading firms are concluding deals of HRC and HDG from Chinese producers to sell them to Europe. As a conclusion, flat steel in Europe is currently slow due to the fact that the market conditions are showing uncertainty and due to the low levels of stocks and sales volumes.