UK based MEPS said that most producers in northern Europe have increased prices steeply and frequently in recent weeks. After a period of unprofitable operations, the mills are attempting to recover their rising raw material costs and build in some margin. End users are not fully convinced by the logic of these advances as they perceive no significant expansion in demand. The escalation in values so far this year has brought some welcome respite to beleaguered distributors.

However, there is still no desire to grow inventories as uncertainty over the development of selling numbers persists. Higher price levels may not be sustainable without an upsurge in demand by the third quarter, unless suppliers have the courage to maintain selling figures in the face of falling volumes.

According to MEPS, the market for plate has lagged behind that of other flat products in recent times. However, we have reports of both prices and sales volumes picking up in the last few weeks, even leading to some holes in inventories. The small advance in the basis prices for stainless steel flat products in April is insignificant compared to the hike in alloy surcharges. There has been some upturn in sales volumes but real demand has not noticeably improved.

MEPS added that "Although the end of the severe winter has led to a reawakening of construction activity in most Northern European countries, the rapid rise in long products prices is essentially driven by raw material costs. The effect of the current higher iron ore contract figures has been amplified by the uncertainty arising from the move to quarterly deals. Moreover, the mills have taken the opportunity, in a rising market, to increase price extras on such products as medium sections and merchant bars. However, market participants do not believe that the hikes in selling values are supported by consumption. Many fear that prices will collapse after the summer unless there is a significant uptick in underlying demand."

(Sourced from MEPS - European Steel Review Supplement)