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S. European distributors continue destocking - 1 November 2011

Southern European distributors have been destocking since the end of summer, Steel Business Briefing learns from local sources. The target is to get inventories down to as low as 40 days of sales by mid-December, before beginning to buy what is necessary to meet demand in the first quarter.

At last month's World Steel Association meeting in Paris, mills concurred that the main issue affecting the market in recent months has been the lack of apparent demand. While real requirements remain somewhat stable, stockists and distributors have brought forward and intensified the usual Q4 destocking in a bid to align supply and demand.

Sources expect the market in the region to be rebalanced by end-November, with some possible restocking taking place then, assisting in a recovery of prices.

"We have noticed that destocking has been stronger than last year. We saw a number of distributors using the docksides, where traders had open positions, as their own stock, buying small trucks of material when needed," a major stockist in southern Europe explains.

Currently stocks in Spain and Italy are said to be at an average of 45-60 days of sales, with all sources targeting 40-50 days by end-November. In southern France these levels are slightly higher with stocks currently at 80-90 days, going down to 60-70 days by mid-December.

It is on commodity grades where stocks are at the lowest levels, SBB notes. "Going forward we believe distributors should specialise in products instead of keeping a big variety. This is what we are planning to do at our stocks around Europe," a source at a distributor comments.

 

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