The Dutch steel and metals sector has benefitted from a rebound in the building sector, but at the same time demand from the energy sector has decreased.
- The Dutch steel and metals sector consists mainly of steel traders and wholesalers, and is highly dependent on domestic economic development, especially construction sector performance. Therefore, the industry has benefitted from the recent rebound in the building sector. At the same time, demand from the oil and gas industry has decreased.
- Competition remains high in this industry, especially in the trade and wholesalers segment. Profit margins are generally low in the steel and metals industry, but are expected to remain stable in 2016, in line with the steel price development.
- Dutch steel traders and wholesalers are higly dependent on banks in order to finance their stocks. Banks have become more willing to lend than in previous years due to the economic rebound, however any major steel price decrease makes it harder to obtain additonal credit facilities.
- Payments in the Dutch steel and metals sector take 45 days on average. Payment behaviour is quite stable, and it is expected that non-payment notifications will not increase in the coming six months.
- Insolvencies have decreased in 2015 and are expected to level off in 2018. The insolvency level in this segment is quite low.
- Our underwriting stance will remain generally neutral for steel and metals traders who benefit from the construction rebound, and restrictive for steel and metals businesses that are negatively affected by lower orders from the oil and gas sector. Given the deterioration in this segment our general outlook for the industry remains “Poor” for the time being. Close monitoring of all steel and metals buyers is still necessary due to the very competitive business environment, which could lead to decreasing margins or even to the loss of contracts/orders for some steel/metals businesses.
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Market Monitor Steel September 2016
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