The UK may yet catch a glimmer of summer sunshine, but the industry is settling down for a quiet period. Most yards report that trade has already been quieter than usual, and those that can afford to take the time off will be preparing to shut down in the next week. Export demand remains weak and virtually non-existent from most of the European mills at present.
With Spain and other countries in mainland Europe effectively out of the market, merchants in Scotland report that export prices remain weak and some traders fear they will move even lower in the near future.
India is still in the market for most grades. But there are unconfirmed rumours of a $20 (£12.80) per tonne cut in the offing. Most seriously, there are no indications of any upturn in raw material stocks or yard intakes, and arisings of new production steel have dried to a trickle.
Merchants in the north report quiet trading, although this is not unexpected for the time of the year. One merchant summed up: “It’s been pretty stagnant for the past month or so, with not many sales. I can’t see any improvement on the way.
“There are no great orders from steelworks and, even if they do order, the payment terms are ridiculous - it is better to export. We are going into ‘factory fortnight’ [when many plants close]. It’s not a great time to hold on to scrap because you can’t see if it is going to get any better, at least in the short term.”
Low volumes of scrap and atrocious weather have not helped gate trade in the Midlands. Merchants report “no building going on, no demolition, the garages are quiet - no one is doing anything”. They expect trading to be even quieter next month, when more people are on holiday.
Current market conditions are making it difficult to judge how the markets will fare after the summer break. As one merchant said: “I can’t see any lights on the horizon.”
Southern merchants also report quieter trading conditions, and are well ahead of the seasonal downturn. “Prices have been a little up and down in the past few weeks, but there is not a lot happening anywhere,” one told MRW.
Last week’s news of a £10 per tonne across-the-board price cut by local steelworks in south Wales turned out to be premature. Only after further prolonged negotiations have there been agreements to lesser cuts of £5-£6 per tonne for July deliveries. As usual, the £1 per tonne difference is dependent on grade, with premium grades faring better than Mixed 1 & 2.
This may be due partly to UK steelworks taking orders from Spanish factories that are unable to obtain credit guarantee insurance. But with almost nothing coming into yards, shortages are the main reason.