European downstream sectors recover slowly from low levels

In most European downstream sectors, the business situation is slowly recovering from low levels, according to the short-term outlook in the Eurometal Business Report of April this year. Some European end-use sectors like machinery and engineering and eventually automotive may benefit from a recovery in international trade following the economic recovery in Asia.
 
According to the report, there is low evidence of stabilization in the construction sector and uncertainties regarding the European automotive markets remain, as scrapping schemes in main markets are phased out.
 
A ‘technical' recovery of steel demand has been triggered mainly by stock replenishments and less by real steel consumption. The main uncertainties prevail in relation to availability of trade financing and tight credit insurance conditions.
 
In February this year, stockists' steel sales improved by one percent year on year. However, due to severe winter conditions in northern Europe, rebar sales were highly depressed. Meanwhile, as compared to the year-ago period, beam sales recovered significantly in February.
 
Stock levels for long steel products are rising again, indicating a seasonal restocking in anticipation of the seasonal upswing of long products business during spring.
 
Strip mill product sales have had a good run since the start of 2010, particularly for cold rolled flats, galvanized and coated flats.
 
Stock indices for flat products are now back to normal and eventually at rather low levels for cold rolled and galvanized flats. Considering February 2010 sales developments, the positive orientation of the flat steel markets is confirmed by the European Association of Steel Service Centers' (EASSC) market monitoring.
 
Steel service centers' flat product sales in February 2010 improved strongly as compared to both January this year and February 2009, and service centers are in the process of replenishing coil inventories.