The local Polish flats market is currently on the way up. ArcelorMittal Poland's base price of HRC ex-mill has risen to €320-330/mt, up from €290-310/mt three weeks ago. The upward movement has been justified by the number of orders received from steel service centers and stockists which have practically completed their destocking phase. There also seems to be upward movement for the same reasons in other parts of Europe such as England, Germany and Belgium, generally with an increase margin of €10-20/mt. In conclusion, integrated producers' attempts to raise prices are not unexpected since their profit margins have been squeezed due to the reduction in their sales prices and sales volumes. The important question, though, is whether such increases will be accepted by the market
While demand has improved from wholesalers and stockists, orders from end-users have remained low, though demand for electro-galvanized PPGI from the automotive sector has risen slightly. According to the European Automobile Manufacturers' Association (ACEA), in April new passenger car registrations declined for the twelfth consecutive month in Europe, totaling 1,251,862 units, or 12.3 percent less than in the same month a year ago, while German sales were up 19.4 percent in the same period. This figure indicates that the car scrapping premium introduced by the German government is the most effective such program announced in Europe. Nevertheless, despite the above figures in Germany there has not yet been any significant real growth in local auto steel demand as German automakers are still not close to the end of their destocking process. Staying in Germany, as for mechanical engineering, the second worst affected flat steel consuming sector after the automotive sector, according to VDMA (German mechanical engineering association) metal orders have declined by over 50 percent so far in 2009.
Looking at the general economic picture in Europe, as indicated by the European Union's statistics office, European consumer spending and exports contracted the most in at least 14 years in the first quarter of this year and investment also slumped, as the worst global recession in more than six decades prompted companies to cut output and jobs.
According to Bloomberg sources, EU gross domestic product shrank 2.5 percent in the first quarter this year from the fourth quarter last year, the largest contraction since the data were first compiled in 1995. Household consumption contracted 0.5 percent while exports dropped 8.1 percent and imports fell 7.2 percent, all constituting the greatest contractions since figures started to be issued in 1995. Investment spending declined 4.2 percent after a 4.3 percent contraction in the previous quarter that was also the sharpest fall since 1995.