European Steel prices approaching bottom of the current cycle
LONDON: Procurement activity, resale values and sentiment remain weak, in the European strip mill products market, in November. Slow economic growth, global trade conflicts and political difficulties have added to the air of pessimism. A lack of orders, from the auto sector, in particular, continues to have a significant negative effect on overall demand. Basis values are under downward pressure. Domestic delivery lead times are short, allowing customers either to postpone buying decisions, or to purchase only small quantities.
On a brighter note, price offers from third country suppliers began to rise. For the moment, Ilva is not accepting new orders, because of the withdrawal of ArcelorMittal from the deal with the Italian government to take over the company. If this situation persists, it should help to tighten supply throughout Europe, adding to the capacity cuts already in place at other steelmakers. Moreover, a number of buyers believe that prices are reaching the bottom for this cycle. Consequently, a degree of inventory replenishment may get underway, following a prolonged destocking phase.