European steel prices recovered slightly in recent weeks, having declined further in October. Inflated energy costs strengthened producers’ resolve to halt the downward trend.
The announcement of the new quota-based steel trade deal between the EU and the United States, although short of detail, boosted the mills’ confidence. Purchasing activity, however, remains weak.
A number of producers have switched to night-time and weekend working, to mitigate energy cost hikes. Others have brought forward maintenance programmes, in response to falling order intake. Despite this reduction in output, delivery lead times are shortening, for all steel products.
Inventory levels are high within the distribution chain. Shortages earlier in the year resulted in additional orders being placed, to ensure supply. These are now being delivered.
Ports’ storage facilities are full of imported steel, and operators are refusing to accept new cargoes until old material is collected. This puts pressure on distributors and service centres to reduce their selling prices, in order to create space in their warehouses. With the year-end fast approaching, however, companies face the dilemma of reducing stock levels without damaging annual financial results.
Prices in other regions are falling. In the US, reduced automotive demand and a seasonal spike in imports have seen transaction values decline by up to ten percent, from their previous elevated levels. Chinese domestic prices have dropped by up to twenty percent, as construction demand slows and market sentiment deteriorates. This has yet to translate into increased export shipments from the Asian country.