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NW European coil market under pressure, mills cut output - 30 September 2011

Traders are selling positions at cheap prices and buyers are trying to force discounts from mills looking to secure orders. As a result the northwest European coil market is in desperate need of direction, sources tell Steel Business Briefing.

Some European mills are selling hot rolled coil into the German market at as low as €500-510/tonne ($682-696/t) ex-works base, one informed producer source suggests. “Northern European prices are lower than southern Europe and imports. It’s crazy,” he says. One mill has tried and failed to implement a €25/t increase for October rollings, producers and traders say.

At the same time traders in the Benelux are selling positions below €500/t ex-works amid global and European economic uncertainty. The disparity between buyers' bids and mills' offers is growing, one trader says. “If you look at the offers I have got in the last two weeks and enquiries from customers, the difference between them is getting bigger.”

However, another source alludes to the fourth quarter of last year, when coil prices “suddenly exploded.” “It can change at any moment. Since May-June very little has been bought for stock: people are not restocking, just buying what they need,” he adds.

As a result prices could move up as buyers have not bought much imported material, which is uncompetitive at current exchange rates. This gives local mills more scope to raise prices. Producer sources are hopeful that output cuts could also help bolster prices into Q4: Salzgitter and ThyssenKrupp have just both announced they will trim output following the lead of ArcelorMittal.


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