Some mid-sized and large flat products service centres in Southern Europe and France are having difficulty in passing prices increases on their raw material further downstream, Kallanish finds.

“Prices of sheet and welded tubes are not following the hot rolled coil, cold rolled coil and hot dipped galvanized hikes announced by European mills. While producers’ prices are increasing, distribution prices are not and this is a paradox that cannot last. Final demand is not helping end-users to pay higher prices,” a service centre complains.

A similar situation is happening in the plate market. Producers have higher input costs for slabs but cannot translate this into actual price increases for plate. “The increases that we are seeing in Europe for flat products are happening as a reaction to the anti-dumping duties and [… market] speculation. I would have preferred that they were due to an actual improvement in demand,” a re-roller comments. In many European countries such as France, Italy and Spain, re-rollers are struggling to decrease discounts, Kallanish notes.

European mills, especially the largest ones, are determined to further increase HRC prices approaching the level of €500/t ($554/t) in the New Year. Some are already insisting on €450/t base ex-works while the average transaction price in Southern Europe, stable on October, remains in the range €410-420/t base ex-works. Incapable of passing the increases on to customers, the distribution sector is beginning to see margins erode as November is expected to bring further increases, Kallanish hears.