Delivery times announced by European commodity roll manufacturers in the first quarter of this year were consistently shorter than those of foreign suppliers, despite reduced production volumes. Asian mills have been tracking market movements in the EU and keeping price differentials from European production too small to generate much interest.
The recent disruption of several EU blast furnace steel plants has exacerbated restrictions on the production of steel products, introduced to prevent excess supply in the market. As a result, delivery times in Europe have increased, and new domestic offers, if any, are postponed to the third quarter on a par with imports.
In addition, due to the change in the US dollar against the euro, effective import prices expressed in in euros, fell again last week. Hot rolled coil is offered for less than 700 euros per tonne, with imports offered at a discount to European prices up to almost 200 euros per tonne with a similar arrival time.
Buyers remain uncertain about the future direction of the market and are unwilling invest in speculative stocks. They take the widening gap between domestic and import supply as a sign that local factories will have to adjust their aspirations downward.
However, European producers reacted to the additional shortage of supply by announcing further price hikes above and beyond what they were already trying to achieve. The move was met with skepticism by buyers. Service centers and pipe manufacturers cannot take into account previous increases in selling prices.
Southern Europe tends to be extremely reluctant to imports. However, in the short term, the deficit is likely to continue as supply in Europe is very limited. However, it seems that prices in the EU have reached their peak. Following the drop in import offers, some domestic mills have already reduced their asking prices.
