Automakers return HDG volumes to mills, lead times improve for December

European HDG prices were stable Oct. 27, with sources seeing a bottoming in current prices, and expectations of further stabilization. Market participants from across Europe are attending the BlechExpo fair in Stuttgart, Germany, to make sense of fluctuating market dynamics.

A European mill source said automotive manufacturers had relinquished HDG volumes as a lack of demand from the ongoing semiconductor and chip shortage restricts automotive production.

The return of large automotive orders has resulted in speedier delivery from mills for as early as December – two months earlier than expected.

A deal for 300 mt was heard for Eur1,250/mt ex-works Ruhr for December delivery, and another subsequent deal heard for Eur1,200/mt ex-works Ruhr.

The European mill source expected greater clarity on the semiconductor and chip shortage to come from the BlechExpo fair, though the market would mostly need to rely on the situation in China and Vietnam, where the bulk of those components are produced.

“Everyone is expecting to know more at the fair. Volvo has no problem with production apparently, we are hoping they will take HDG again,” the mill source told Platts. “But no one knows when this will happen, has to come from China, Vietnam – we are relying on this.”

The source was confident, however, that the shortage would be short-term, and did not expect the influx of rejected automotive material to have any severe consequences on HDG prices.

The looming reality of higher energy costs is likely to raise prices in the near term, as mills struggle to contend with higher production costs, particularly along the EAF route.

The supply situation is very imbalanced sources have pointed out, with plenty more availability on HRC compared to critically low stocks of CRC and HDG, though returning auto volumes could ease this supply tension slightly.

— Amanda Flint