EU distributors see margins squeezed by strip price hikes

The EU flat product distribution sector’s outlook for the last quarter of 2016 looks more challenging after a positive development during the first half of the year, Georges Kirps, general director of distributors’ group EUROMETAL said on the sidelines of the EUROMETAL conference held in Milan on Thursday and attended by Platts.

The slowdown started in July with EU shipments dipping by almost 10% as service centers faced difficulties to pass on their higher costs. “Mills pushed for higher prices but these were not sustained by the demand, and we saw this across all Europe”, Kirps commented.

“Yes, on the higher end of the chain the mills have already passed to us their price increases since July by at least €30/metric ton with further increments still in progress, but for us it still remains difficult to pass these increases on to the final market – squeezing the gross margins for distributors”, Cesare Viganò, vice-president of EUROMETAL, echoed.

According to the last EUROMETAL data, in the EU-28 the first half of 2016 service center sales increased by 1% in all strip products, with Italy seeing an increase of 3%, scoring slightly better than the EU average.

In the first seven months of 2016, EU flat service center shipments for HRC went up by 1% (Italy +3%), CRC down 2% (Italy 0%), HDG and other coated flats +4% (Italy +4%), EUROMETAL data showed.

Annalisa Villa, PLATTS