Buyers of steel sections have heard of price hike efforts in Germany and adjacent markets, but do not anticipate a big change going forward.
Sections prices are little changed so far this summer, and for most weeks have scarcely been seen much higher than €820/tonne ($933/t) for category 1, delivered. Last week, ArcelorMittal was reportedly heard striving for an increase of €25/t across Europe. First heard in Italy and France, the attempt is confirmed from Germany, with figure of plus €30/t, Kallanish learns from one source.
One northern manager believes that such an announcement should easily be echoed by the domestic German producers, to which ArcelorMittal does not count, although its Luxembourg mill is an important player. “If a filling station downtown lifts its petrol prices, the ones nearer the motorway won’t hesitate long,” he says.
He adds that he would not have bought at the price levels of €820-830/t which have has prevailed for a while. He points out that prices achieved from consumers downstream are too low to make replacement purchase from mills at current prices, and still be profitable. That puts the effectiveness of higher mill prices in question.
The weakness on the selling side is confirmed by a buyer at a larger distribution group. They note that cheap offers by distributors are mostly made from inventories bought before the price peaked above €830/t in May.
“You really have to draw a line here. New material cannot be sold with a reasonable profit, but many distributors are willing to make low offers from stock material, to keep the cash flow going.”
On the price hike announcement, they see little chance for €25-30/t but do not rule out that €10-15/t could be achieved, “And that would at least be a small step towards stabilisation,” they conclude.
