A tug of war is under way in France between mills and the downstream sector. Long and flat steel processors are caught between weak demand from their customers on one side, and mills pushing for increases on the other, Kallanish hears.
Mills are said to be putting pressure on customers to accept higher prices, particularly for flat products, but the wider picture keeps darkening. Credit insurance is tight for many companies, and processors must cut their own prices or lose sales, several sources say.
Long product prices are mostly stable on-month. For tube and sheet, however, there is a strong push for increases in line with rising coil prices. Service centres are struggling to keep pace with coil increases and are sometimes forced to decrease their prices to hold on to orders. “If these increases do not slow, customers will end up buying lower volumes because they cannot afford the high prices,” a purchasing group source says.
Customers are resisting longs price increases, while tight credit insurance availability also leaves them unable to buy large volumes.
Demand has been weak since the second half of June. July was subdued, August was seasonally dead, and September never really got going after the holidays. October is confirming the downward trend for both longs and flats.
“There is turbulence in France, the economy is seriously slowing and we will see the situation of orders worsening with the upcoming elections. Companies will buy for their immediate needs to await the result of the elections,” another source says.
Long product consumption remains limited as companies try to reduce their exposure. Domestic merchant bar is stable at €300-320/tonne ($335-358/t) base delivered, excluding size extras of around €410/t.
Despite several attempts to raise sections prices in recent months, first category material is holding at €810/t delivered on average, against producers’ asking prices of €830/t. Rebar is also flat on-month at €690-710/t delivered, amid an uncertain market and small order volumes, sources suggest.
