EU service center shipments fell in October

Shipments by flat steel service centers in the European Union fell 7% year-on-year in October and stock volumes are increasing as a result, according to the latest data released by EUROMETAL.

The federation of steel, tube and metals distribution noted that in the third quarter of the year, shipments were down 3 % y-o-y, a negative turn after the market’s positive start in the first half of the year.

The data adds more supports to distributors’ complaints that the raft of higher mill offer prices has not reflected the demand situation – although of late some service center and stockholder sources have confirmed they are finding it easier to increase their outsell prices as end-users accept the longevity of firmer steel markets.

The year would still appear to have been a solid one so far in terms of sales volumes, with service center shipments growing 1% y-o-y in the first ten months of 2016 and in recent months at much higher sales prices.

Stock volumes within EU service centers are higher than they were last year with inventories – expressed in days of sales – at 67 days in October 2016, compared with 61 days in October 2015.

Traditionally companies will look to run down their stock levels towards the end of the year, preferring to hold cash in hand rather than assets that could lose value. Observers say it will be interesting to note whether this year there will be a change as many expect the market to remain firm for much of the first quarter of 2017.

Peter Brennan, PLATTS