STOCKHOLM: The number of European stainless steel buyers defaulting on contracts has risen in the last few months as prices of the alloy have plummeted and cash-strapped buyers are struggling to get credit, market players said this week.
Prices of stainless steel products have lost about 15 percent of their value in the last six months in Europe, mainly due to a fall in raw material costs and declining demand.
The 2mm 304 series cold rolled coil delivered to customers in Northern Europe fell from 2730 euros ($3,500) in March to 2400 euros in September, according to price provider Platts SBB.
The product devaluation and tougher credit conditions have forced some buyers to default on contracts, traders said.
"With prices falling so much it′′s obvious that people don′′t want material booked previously at much higher prices," one trader said on the sidelines of a Metal Bulletin stainless steel conference. "Prices are stabilising now but the market outlook is still gloomy."
Small players in Italy have been most affected, but the rest of Europe has not been immune, traders said, citing cases of defaults in other southern European countries, the UK and Scandinavia.
The German market was in a slightly better shape, they said.
The deteriorating financial conditions of all players in the value chain and the reluctance of banks to lend money for projects in construction and manufacturing were also weighing.
"At this point it is difficult to get credit even for the day-to-day activity," said a source at a stockholding company.
