The continued slow erosion of prices for strip and coil products in north-western Europe is passing through to steel users, several of whom have confirmed this to Kallanish. The rate of price descent may be gentle, and it may be more pronounced for some than others, but it certainly reflects changing times, sources in Germany and the Netherlands say.
According to one buyer of hot-dip galvanized coil in the Netherlands, “… there is no shortage of material, so prices continue to soften,” he says. He indicates a price range for HDG of €600-620/tonne ($684-707/t), which is more generous than that signalled by a fellow countryman, who in mid-January said that prices had not yet dipped much below €620.
One German buyer of primarily hot-rolled coil for automotive processing purposes who buys from service centres tells of his recent annual negotiations. “It was quite intense, but as we went along in various rounds, we eventually reached reductions of €5 here and €3 there, I was surprised myself.” He concedes that his company has achieved lower prices than other fabricators to whom he has spoken. In comparison with last summer’s half-yearly negotiations, prices have come down by €40/t, he says.
“Service centres want to generate sales, even at the cost of [… losing] margin, and make sure they keep themselves busy,” he says. After two to three years that have been “… characterised by ‘more, more, more’, sellers will now have to rethink whether they can carry on being driven by volume and revenue, at the cost of profit,” he adds.