All EU markets are still under the effects of holiday anesthetic, with prices last week remaining basically on the same levels of previous week.
Imports is frozen as the few operators still active can find available materials at prices matching or, in the worst case, slightly above those offered from import. Some important factors pushing buyers to choose for domestic option are both payment terms and minimum quantities required for booking which are, in most of the cases, definitely better and easier than those available from import.
All products are characterized by an evident schizophrenic situation, whereby Mills are all but keeping prices firm and announcing increases by early September of minimum EUR 30 per tonne all across their production range and buyers remaining extremely skeptical about the concrete possibility of such increases being implemented.
The main reason is that consumption and demand are, once again, showing erratic and weak trend. Germany is the only country, partially together with France, showing signs of strong recovery as scored a GDP increase during 2nd Q ''10 of more than 3% which is best result since reunification. However the performance has been mainly driven by export to third countries, which is shading doubts about lasting capacity. Other countries such as Italy and Spain are on the contrary still fighting with weak domestic markets and available over capacity.
Specifically products directly connected with real estate and housing industry like HDG and PPGI are greatly suffering in Spain and in a smaller extent also in Italy of the lack of new investments. Particularly low coating HDG mostly used for producing profiles that are important items for "gyps cartoon" walls and structures, is facing a very difficult period. Nominal prices asked by Mills are well beyond levels affordable by profilers which are always chasing around for stock and distressed lots.
In East Europe, mainly Poland and Czech Republic, profilers are bidding prices around EUR 500 per tonne delivered for any available 2nd or 3rd choice stock, with small success. PPGI is in a slightly better position as "white industry" is some how keeping the pace, although also suffering of low domestic consumption due to higher unemployment rate and lack of important infrastructures investments.
During last months, the prices of both products have deteriorated, reaching quite low levels compared with those of the beginning of the year. We understand that, in order to sell important quantities of HDG from import, offers should be around or even lower than EUR 600 per tonne CFRFO basis for 1 mm in Z140, which can''t be found from any actual source.
PPGI workable price for a buyer available to book a quantity of around 1000 tonnes can''t be presently be over EUR 710 per tonne to EUR 720 per tonne CFR FO. Of course domestic Mills are applying much higher prices but that''s for quite small size bookings and, in most of the cases, for very fast delivery times.
Long products are still fighting against an over capacity situation and despite mills efforts to increases prices, these are remaining at lower levels than 3 months ago. On the other hand, scrap price that is constantly increasing since about one month is putting pressure giving to Re-rollers no other option than to ask for price increase. During last week some Italian producers have increased their price list by EUR 30 per tonne which most probably will find settlement in an actual increase of EUR 10 per tonne to EUR 15 per tonne or even will just serve to keep same levels as before.
The mantra of the sector is always the same: over-capacity. Till when it will not find a final solution, which is definitely not the case in the medium term, long product market will continue to suffer of an erratic and basically negative trend. The actual ratio of 1:5 and 1:3 respectively in Spain and Italy figuring out actual consumption to installed capacity of debars and wire rod is not promising any thing good for the next years to come and could lead to several closures and merging unless of a strong consumption revival within short time which is not at the horizon.
The only country that has given signs of strong price recovery, at least in a nominal way, is Turkey. Domestic producers of long products have been forced to increase prices under the pressure of scrap prices increases both from import and domestic sources. However increases have dampened sales and during last days there are news of important sales of debars in MEA at prices well below the official ones.