Steel prices in the EU fell in May

The recent negative dynamics of European flat steel prices continued in May. Lower demand from the auto sector still undermines steelmakers' ambitions to increase base prices. Moreover, overall market activity is below forecasts for this time of year. Global trade tensions and political uncertainty have led to a lack of investment and prompted a great deal of caution. Service center stocks exceed current requirements, resulting in significant negative pressure on resale prices. Distributor purchases remain weak. New import proposals are currently uncompetitive. A large amount of foreign material booked at the end of the year will take time to consume.

Due to weak demand and in order to try to stem further price declines, ArcelorMittal announced its intention to temporarily suspend production at its steel mills in Krakow, Poland, and cut production in Asturias, Spain. In addition, the planned increase in shipments from ArcelorMittal Italia will be slowed down. These actions should lead to an overall reduction in supplies of 3 million tons per year. Subsequently, the company informed buyers of an anticipated price increase of € 30/40 per tonne for all strip products.

Further contraction was noted in the manufacturing sector in Germany in April. The sentiment on the steel market is negative: activity is still at a relatively low level against the background of the continuing decline in sales. Buyers are careful not to place new orders. They expect further price declines as manufacturers try to close gaps in their order books. The difference between domestic supply and supply from abroad is narrow, which has a constraining effect on new import activity.

French benchmarks are down from last month. Activity remained at a reasonable level, although lower than in April. MEPS finds significant competition among distributors who have been forced to adjust their resale prices accordingly. They then negotiated discounts with steel companies to keep profit margins. Now, in anticipation of further price reductions, major service centers are postponing purchases until June. A number of traders are reported to be selling at a loss. Very few new proposals are cited by third country importers.

The decline in the manufacturing sector in Italy continued in April for the ninth consecutive month. This greatly influenced the steel market. In addition, the number of working days in April /early May was greatly reduced due to the holidays, which negatively affected the volume of pr�