Distribution reports weaker demand in February: Assofermet

After acceptable sales in January, demand from end-users is weak in the first days of February. Buyers seem to be “disoriented” by steelmakers’ further price increases despite the contracting levels of consumption. Weak demand is attributable to the EU economic crisis and the conflicts in Ukraine and the Middle East, Italian steel trade association Assofermet says in its market note sent to Kallanish.

EU steel prices are supported by the strong limitations on imports and by the reduced use of European production capacity. This adds to the Acciaierie d’Italia crisis that is operating with only one blast furnace out of the four available. Offers from non-EU countries, in particular from Asia, appear to be more competitive compared to European steel despite the increase in freight rates through Suez. However, the risk that import quotas will will rapdily exhausted are making Asian offers less attractive and causing Italian buyers’ prudent behaviour.

Despite the weak downstream market, Assofermet forecasts possible increases in sales prices from distributors in the short and medium term in light of the significant increases in costs the sector suffered in January. “It is worth highlighting the lead time lengthening from coils steel mills that will impact coils availability of coils in service center warehouses in the coming months”, the note concludes.

Natalia Capra France