Some market participants in the northwestern European flat products market are blaming the recent dip in coil prices on distributors rather than mills.
While mills have brought down their prices also, it is the distributors that moved first, causing mills to follow, one southern German manger is sure. “The pressure on prices came from the distributors, not the mills,” he says.
He cites one German market group which, among others, “sold a lot, and at low prices”. According to him, the low offers originally came from service centres “from purchases made earlier at lower prices, and now sold for less than they would pay the mills for a refill.”
He tells of sales prices for sheet and slit strip of around €800/tonne ($930/t), which would calculate back to a mill base price of €700, plus customary surcharges, transport and cutting/slitting services.
Although he says he has not received mill offers of €700/t or less, big buyers did, with prices in the range of €680-710/t ex-works for several weeks now, they tell Kallanish.
One Benelux service centre manager confirms that “various service centres and distributors have had to lower their selling prices slightly to remain in line with the market”. He refers to low demand and reservation among steel users, although he refrains from admitting that the service centres were the first to make price concessions.
Observers largely agree that inventories are full enough to allow service centres sales without margins, for the sake of cash flow, and apparently many are quite busy, especially in Benelux.
According to another German buyer, lead times for sheet can now easily be three to four weeks, rather than three to four days. And while service centres enjoy business on the sale side, they continue to postpone their intake of new coil from mills, German as well as Benelux sources say.
