Reuters reported that the rising cost of finance will squeeze small and medium steel market players.

Mr Georges Kirps VP of the steel and metal distribution association Eurometal told the Metal Bulletin steel conference that "The financing of working capital has become a major problem over the last year. Banks are squeezing credit, at least if you are not one of the big names. For some middle sized and for the small traders this clearly is a big problem."

Eurometal said that although European steel stocks had fallen in volume terms, they were at a level of about 75 days of sales, slightly more than just a few months ago. Mr Kirps said that "These days of sales have gone up over the last two or three months by a few days because there are less sales, not because there is more stock. If stocks in days of sale fall to 65 days that will release EUR 2.5 billion across the sector."

Other traders and steel players also expressed concern about increasing cost of financing and the gloomier economic situation which is likely to weigh on steel demand in the last quarter this year.

Mr Ralph Oppenheimer chairman of one of the largest private steel trading companies said he had never seen bankers so worried as they were this month. He added that "Some of them really are warning us that they may be forced against their wishes to curtail the lines of their offering. It is clear that everybody is going to have to pay a lot more for the credit and the cost of finance is going to go up. Banks have got such enormous losses to make up that they are becoming greedier and greedier when it comes to the charges that they levy on their customers."

(Sourced from www.reuters.com)