While European coil mills have succeed in exerting gradual price hikes, it is not so clear distributors will be able to pass these on, given the continued low demand environment.
According to a manager at a German distributor, some service centres keep offering bargains to sell from stocks, with offers heard at lower than €670/tonne ($790) for hot rolled coil. “That’s the purchase price for April deliveries; it’s not good, and they really need to stop that,” he tells Kallanish.
The market leader mill recently gave €720/t as the new target for northwestern Europe; at least one other mill gave €700/t, for now. Most transactions these days will be at around €680/t as lead times are stretching towards May.
Strikingly, the market leader defined a higher price for southern Europe, €750, apparently on the grounds of lower availability in the south. Observers point to the stoppage at the mill in Gijón, Spain, which occurred shortly before the latest price hike announcement. Some meanwhile assume production problems are occurring at the mill in Fos-sur-Mer, France, after a stoppage in December.
Despite these discrepancies – north-south and upstream-downstream – mills’ general price direction is upwards. The uptick trend is seeing “hardly any aggressive counterbids to put pressure on the price level,” a Dutch manager finds. Offers at lower levels are being absorbed quickly, which “indicates that the risk of further increases is considered more serious than the risk of a rapid correction,” he argues.
