A recent report has suggested that European stainless steel producers look set to see a drop in profits as their clients look to work from pre-existing stock rather than purchase new steel.

Additional factors, such as plummeting prices for their products and a potential weakness in nickel prices, are also being considered and will likely have stainless steel buyers remaining hesitant.

This will have the knock on effect of the mills not producing a solid profit in the third quarter of the year, as demand remains fragile amidst an atmosphere of over-production.

“Seasonally, Q2 tends to be one of the strongest of the year, but this year I expect profits to be weaker than in Q1,” said UniCredit analyst Jonathan Schroer.

“This will mainly be due to more hesitant purchasing by distributors, who have been waiting to see if nickel prices and therefore stainless steel transaction prices will fall further.”