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More European mills hike sections prices, stockists dubious - 25 November 2011

ArcelorMittal is following Salzgitter’s lead and increasing its sections prices by €30/tonne effective January, and smaller producers are reportedly also increasing prices. Sections prices have remained at around €600-625/t ($801-834/t) delivered for category one in recent weeks.

ArcelorMittal will begin booking January rollings on Monday, the company tells Steel Business Briefing. However, market participants are divided on whether mills will achieve the full €30/t increase in January.

“I’ll believe it when I see it,” one stockist says. Demand remains weak and end-user prices have not yet increased in response to the mills’ announcements, he indicates.

Mills may face more pressure to sell than stockists face to buy, one distributor believes. Steelmakers’ financial results have not been good and many sections produces have high levels of debt, he notes.

In spite of low levels of buying some stockists say their inventories are still too high. They are therefore unlikely to book new material until the New Year, one notes.

However, another larger stockist indicates that even with current levels of end-user demand, some material would have to be ordered before year-end in order to continue serving customers.

Even if bookings are not sufficient for a price increase in January, the increase could be achieved for February rollings as stockists may be more willing to buy at the start of the financial year, another distributor notes.

Mills have also been controlling output to boost prices. Both Peiner Träger and Thüringen in Germany will close for three weeks over December and January, for example.

 

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