The National Association of steel service centers has warned the model of buying forward in a falling market cannot continue noting there is “a judgement day appearing” as we enter the new year.
While pricing has been weak throughout the year, the message in the latest annual report from director general, Peter Corfield, noted a reasonably good year for volumes.
“The maintaining of revenues by purchasing material ahead of the game in a market which has price levels on a downward spiral cannot continue, with a judgement day appearing ever closer as we approach 2016,” Corfield said.
UK demand for NASS Core Products in 2015 is expected to be circa six million metric tons; slightly down on 2014 levels but higher than any of the previous five years. Long products outperformed flats with volumes 8% above 2014 numbers. Structural Sections in particular benefited from the strong UK demand within construction, with NASS putting the volumes at 1.2 million mt. NASS members reported an 11% improvement on 2014.
Plate and profiling activity after the first 10 months of 2015 was 4% higher than last year. On the flats side hot rolled volumes were stable, cold rolled was down 15% and Hot Dipped Galvanised was 3% down.
“Whilst cost cutting exercises have been the main focus to address sustainability of steel businesses, the longer term strategies will clearly have to pursue increased added value activities and productivity measures to ensure products are processed and supplied to the marketplace as efficiently as possible,” Corfield said.
— Peter Brennan, PLATTS