Buyers, especially of coil products, will be cautious with placing orders in the first quarter of 2022 because they need to bring down current overstocks, according to a speaker at Tuesday’s Kallanish Flat Steel 2021 conference.
“Orders from steel service centres and tier 1/tier 2 suppliers at mills will be lower for a while because we need to get rid of our high stocks,” said Francios-David Martino. The chief executive of Europe’s largest service centre, Becker SSC in Germany, believes that this will occur through Q1 and into Q2.
Due to the shortage of semiconductor chips, call-offs for steel put aside for the automotive industry are 30% lower than planned, he detailed. Business in the first quarter will not be totally out of the ordinary, but “we will draw less from mills”, he said.
Becker SSC, based in Bönen, North Rhine-Westphalia, has a storing capacity of more than 100,000 tonnes, and these days is dealing with “double the volume we have normally”, Martino revealed. Even more pressuring is the burden on tied-up capital, as the extra volumes translate to “times the cash that is locked”, he explained.
His thoughts were picked up by Fernando Espada of European distributors federation Eurometal. Companies that have problems with tied-up capital “will stop buying simply because they cannot afford it anymore”, Espada added.
Christian Koehl Germany
