MEPS International Ltd has noted a degree of price stability in the European flat products market over the last month. Steelmakers continue to push for higher prices, proposing between €30 and €40 per tonne, in order to boost their low profit margins. However, the announcements and the reality are somewhat different. Buyers believe the target figures are unrealistic, given the present state of end-user demand. Consequently, they continue to try to resist the mills’ aspirations. Prices for some quarterly contracts have already been rolled over from period one to the second trimester.

With the exception of a small pickup in activity during January, as companies concluded business for February/March, German demand has remained flat. Consumption in the second half of 2014 is expected to be better.

Despite the mills’ announcements of increases, French basis numbers have been largely stable over the last month. Delivery lead times remain short, at around three weeks maximum for new production. There is limited third country import penetration.

The Italian economy is slow and steel market activity is not picking up, despite optimistic announcements on GDP. Final demand is weak, with only small tonnage orders being concluded. Distributors are unable to lift resale prices and, therefore, they are unwilling to pay more to steelmakers, regardless of producers’ efforts to persuade them.

Several UK service centres report a more encouraging business environment, with this January’s volume much higher than in the previous year. They have reasonably good order books and resale values are steady.

Market sentiment has recovered a little in Spain, where steelmakers have successfully pushed for small basis increases, despite no sizeable improvement in demand. Distributors are now trying to lift resale values amidst resistance from end-users. Service centre objectives are to keep inventories as low as possible.