European service centers evaluate strip pricing strategies

Participants in the European strip product distribution market are evaluating what their new pricing strategy should be in light of the raft of higher mill offer levels, while mills are talking up the possibility of further increases.

Service centers and stockholders are assessing how they can pass on the extra cost of their future replacement stock to customers in light of the oversupply in the downstream sector.

The market took a break last week as buyers and sellers met during the EuroBLECH meeting in Hannover, Germany. Mills have been firm in increasing their hot rolled coil offer levels to €500/metric ton ex-works while CRC and base hot-dip galv is a further €100/mt.

“At the moment there is a kind of panic, due to the higher prices from Tata and ArcelorMittal. Everybody has to pay higher prices but when you go into the market there are still a lot of stockholders keeping their same level,” a service center buying source said.

A stockholder in Germany said he had achieved €10-15/mt of the €20/mt increase his company had implemented weeks earlier, but now outsell prices have to push again.

The raft of anti-dumping measures has spooked a number of those in the market feeling squeezed by European mills. New sources have been seen in HRC and CRC, with Taiwan increasingly mentioned as an option for HRC buyers, although others suggested Taiwan was mainly active in the PPGI market. However, there are very few attractive options currently.

Mill sources have been bullish with one noting “€460/470 EXW has been easily achieved, we feel the target of €500/mt will be reached very soon. And if raw materials don’t drop we could see more increases in the second part of Q1”.

Peter Brennan, PLATTS