Sheffield based consultants MEPS report Hot Rolled Coil (HRC) prices in EU soared by almost €100/t in February.

Buyers are anticipating further increases in Q2 as steelmakers make large upward adjustments, in line with higher raw material costs. The EU mills are currently busy because of the restocking exercise that started in December ahead of price rises.

According to the latest research from MEPS, German distributors are experiencing a revival in market demand, amidst well regulated inventories. The mills are pushing for even more increases. These inflated prices could begin to suck in imports later in the year. Although buyers are agreeing higher basis values because they have no real alternative at present, they are only ordering what they need.

Basis figures are continuing to rise in the French market. End-user demand is described as ‘moderate’. There are some third country imports at the docks but quantities have recently dwindled.

All the mills supplying the Italian market are ramping up their basis values. Distributors have been restocking in anticipation of even more expensive steel in the future. However, MEPS notes final consumption is far from robust and, consequently, end-users are reluctant to pay more.

Mill basis numbers are escalating in the UK and resale values are also progressing quite rapidly. The movement is not underpinned by any serious recovery in underlying demand – with the real driver being raw material costs and limited availability from domestic sources.

Having stocked up in the final quarter of 2010, Spanish distributors are now ready to reorder. However, they are only buying just the minimum quantities to keep business ticking over. Current prices do not reflect demand which is stable at a low level.

Source:MEPS www.meps.co.uk