Day: 28 August 2023

Atradius, the world’s second-largest credit insurer, has observed a weakening of the German steel industry this year and sees continued trouble in connection with the overall industrial transformation.

Atradius’ German branch observes that results and forecasts of mills and downstream customers have become cloudier, after relatively good results in the two previous years. The prior period was buoyed by a catch-up effect following the Covid-19 interruption. While this observation is not all new, Atradius adds the perspective of the credit insurer. It states that payment failures of borrowers in the first half have gone up notably, in numbers as well as in volume.

“Our underwriters report that companies keep stretching their due dates for payment in their purchasing activities,” Kallanish hears from Atradius country director Frank Liebold. “Companies are obviously worried about their liquidity, and try to get more leeway,” he adds.

Due to the transition from combustion to electric engines, many automotive suppliers are facing troubles for which they cannot compensate with other sales. “Especially small and medium-sized steel and metals users are troubled by lower demand, because they often serve defined customer groups, and cannot easily divert into other sectors,” Liebold says (see related story).

Christian Koehl Germany

Production activity at Germany’s steel and metals fabricating companies suffered in the first half of 2023, and the outlook is not optimistic either, according to their federation WSM.

In comparison with the first half of 2022, production has waned by 1.9%, Kallanish learns from WSM, which represents some 5,000 companies, mostly small and medium-sized enterprises (SME). WSM notes that SMEs are especially hard-hit by the economic slowdown. “The automotive industry is slowly recovering, but its suppliers are falling behind,” says WSM’s economist Holger Ade.

Ade refers to a poll held by the federation in which 47% say they are looking ahead with concern. Only 8% have expressed optimism. WSM indirectly blames the political pressure on industries to accelerate the technical transition towards net-zero steelmaking. “It is a cocktail of challenges that is toxic for industries,” Ade says.

Managing director Christian Vietmeyer emphasises the responsibility of policymakers to rejuvenate confidence among SMEs, which he says are the drivers of German wealth. He reiterates the call for controlled electricity prices, which is a main cause of concern for the country’s manufacturing industries.

Christian Koehl Germany

Rebar
Fastmarkets’ weekly price assessment for steel reinforcing bar (rebar), domestic, exw Poland, was 2,630-2,650 zloty ($637-642) per tonne on Friday, unchanged since August 18.

Sources reported an offer from one local producer at 2,650 zloty per tonne CPT, which would be equivalent to about 2,630 zloty per tonne ex-works.

Another mill in the country was hoping to achieve slightly higher prices of 2,680-2,700 zloty per tonne CPT, which would net back to about 2,650-2,680 zloty per tonne ex-works.

There was still limited trading in the Polish rebar market, and sources had low expectations of a price rebound in September.

“Demand [for rebar] is low and there will not be many chances for any pick-up this year. The construction sector is very weak – there are no new projects,” a trading source said.

Local producers were reported to be trimming output to balance supply and demand, but industry sources doubted that this would help to keep prices up.

“Mills can try to intimidate the market with output cuts, but I don’t think they will be successful in the end. There is no demand [from end-users],” a second trader said.

In the secondary market, rebar prices were reported at 2,700- 2,750 zloty per tonne CPT, largely flat week on week.

Wire rod
Fastmarkets’ weekly price assessment for steel wire rod (drawing quality), domestic, delivered Poland, was 2,750-2,800 zloty per tonne on Friday, stable week-on-week.

The assessment was based on a few deals reported at 2,750-2,760 zloty per tonne CPT and offers from local mills heard at 2,800 zloty per tonne CPT.

Sources said that producers in Poland were considering raising their offer prices for September, but nothing has been announced officially yet.

Market participants believed that there was no room for any price rise in the wire rod market, given persistently poor demand.

Import wire rod offers to Poland were limited by vacation absences. European suppliers were expected to come back to the market with new offers next week.

One Ukrainian supplier was offering mesh-quality wire rod at €570-585 ($618-634) per tonne from stock, depending on tonnage.

At the same time, one source said that another Ukrainian supplier was offering wire rod around €530 per tonne DAP, which would net back to about €560-565 per tonne CPT.

Published by: Julia Bolotova

Fastmarkets calculated its daily steel hot-rolled coil index domestic, exw Northern Europe at €643.75 ($697.81) per tonne on Friday, stable day on day.

The index was up by €7.50 per tonne week on week but down by €13.13 per tonne month on month.

Few suppliers were active in the market due to summer holiday absences, but earlier this week a leading European steelmaker increased its offer prices to €700 per tonne ex-works for October-delivery HRC.

Sources expected other major mills in Europe to increase their offers to similar levels shortly. But some German suppliers were still offering coil with October lead times at €640-650 per tonne ex-works in the week to Friday.

No transactions have been reported at €700 per tonne ex-works so far, and most buyers considered that price “not workable,” claiming that they could not increase prices in the secondary market.

“Demand [for HRC] remains very weak,” a distributor said. “And the September rebound that mills hope for seems to be unlikely. Only the automotive industry is performing more or less steadily [while] other end-user [steel] sectors are in decline.”

Fastmarkets’ calculation of its daily steel hot-rolled coil index domestic, exw Italy was €635.00 per tonne on Friday, up by €1.67 per tonne from €633.33 per tonne the previous day.

The Italy index was up by €5.00 per tonne week on week, but down by €5.00 per tonne month on month.

Italian market sources estimated tradeable values for September-October rolling HRC around €630-640 per tonne ex-works. But no official offers have been announced by local mills yet due to summer maintenance closures.

Before the stoppages, target prices heard from Italian integrated mills were around €700 per tonne ex-works.

Buyers, however, suggested that achieving such prices would not be possible in the near term, given the slow consumption and the availability of cheaper imports.

“Starting in October, the European market will be flooded by imported coil booked at rather competitive prices,” a trading source in Italy said.

Fresh overseas coil offers were coming mainly from India and Turkey for November-December delivery, at prices that were quite high and therefore uncompetitive — around €630-640 per tonne CFR.

Published by: Julia Bolotova