According to the report lately issued by Eurometal (association of European steel, tubes and metal distribution), flat steel product sales in the EU countries in September again reached the volumes seen in June and July this year. As may be remembered, Eurometal's report published in October stated that distributors' sales had been at low levels due to the summer holidays. Despite the fact that stockists have almost reached their pre-holiday sales volume, the general situation is still characterized by weakness. However, according to the Eurometal report, CRC and galvanized product sales were better compared to sales of other flat steels in September.
Stocks of steel service centers which sell flat steels last summer corresponded to a three-month supply. However, in September, due to better demand levels, stocks among steel distributors corresponded to a supply of two and a half months.
So far in 2009, a four percent contraction on average is expected in the economies of EU countries, except for Poland which has been registering growth. It is expected in general that the EU's economic figures will be more positive in 2010. According to an announcement made by the World Steel Association, steel consumption per capita in the EU will also grow in 2010 thanks to the abovementioned growth expectation. Against the background of all these optimistic expectations, investors are being warned against a second crisis wave. Thus, steel market players in Europe are adopting a cautious approach.
In spite of the slight uptrend in the sales volumes of stockists, demand for flat steel in Europe is in general at lower levels compared to 2008. While Eurometal mentions the reasons behind the cautiousness of flat steel market players, the report also says that steel consumption in Europe has decreased by 70 million mt between 2007 and the year 2009 to date.
Flat steel buyers in Europe have been influenced by the unease triggered in the continent by the downtrend in flat steel prices in China. While Chinese flat steel offers have increased by $20-30/mt and while an uptrend is being observed their export offer volumes, market players wonder how long this uptrend will last. Although there is no great interest in Chinese flat steel products in Europe, European producers have decreased their prices due to the reluctance created among buyers by the China effect and due to low demand. For instance, HRC prices in Italy have decreased to €360-370/mt ex-works and imports to this country are at €350-370/mt CFR Italy. However, a larger gap is seen between import offers and domestic prices in HDG coils in this country.
In general, it seems that the European markets have almost finished business for the year and are only expected to trade small tonnages up to the end of the year. The destocking process that continues in the fourth quarter supports this expectation. Market player are now turning their attention to some other questions - In which direction will the flat steel markets head? Will there be a second financial crisis? And, will the economies of the European countries succeed in registering growth?