MEPS (International) Limited has observed that steel prices are decreasing for most products in northern Europe in November.

It said that “Several producers relit blast furnaces in recent weeks, having perceived an upturn in demand based on increased buying volumes in the third quarter. In fact, this burst of purchasing activity was driven by stockiest replenishing inventories while selling values were low and predicted to rise. Now, demand is extremely weak. The mills are committed to higher output rates. Even operating furnaces at their minimum production levels will result in excess material on the market in the early part of 2010. This will put negative pressure on prices.”

MEPS said that “Some international traders appear to have drawn the same conclusions as the European mills. Steel is being shipped to Europe from China, Taiwan and Korea. However, most buyers are reluctant to gamble on long lead time material when the future of local prices is uncertain.”

MEPS said that long products prices are also showing a consistent downward movement. The exception is drawing quality wire rod, for which sustained reasonable purchasing levels have enabled suppliers to carry over selling figures from October.

It added that “Weak demand for scrap pushed down ArcelorMittal’s scrap surcharge for medium sections and beams by EUR 35 to EUR 75 per tonne. Peiner Träger and Gallardo reduced their surcharges by EUR 32 and EUR 33 per tonne, respectively. Consumption of reinforcing bar is seasonally low due to the slowdown in construction work during the winter period. This has combined with falling scrap costs to drive down selling values.”

(Sourced from MEPS)