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Featured Article - Trading among EU stockists now much more prevalent - 21 July 2011

The buying and selling of steel between stockholders is much more commonplace today than a few years ago, mainly because of cash flow considerations, Steel Business Briefing hears from market participants, mostly in Germany.

“You wouldn’t have seen it five years ago, the way we are swapping material,” a senior manager at a mill-owned distributor says: “We are buying from Remag, they are buying from Salzgitter, they in turn from Klöckner, who then buy from ThyssenKrupp.”

Ordering has become more short-term since cash flow became the main criterion of business. “The price collapse of late 2008 was a wake-up call for everyone,” the distributor says. “Today you’d rather buy at short notice from a competitor than build up inventory, and risk its devaluation.”

Another stockist’s sales manager confirms that purchases from mills with their long lead times of 3-4 months (for plate, for example) were sheer speculation at the moment. “The mill price may be fixed, but the price you’ll get on the market won't be.” Price fluctuations have become more frequent than a few years ago, he says, and as it is impossible to know where prices will be when you get delivery, it is better to buy the low volumes you need from another distributor at a narrow margin, but get them within a day.

 

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