EU coil trend uncertainty grows

Although the northwest European coil market is still characterised by low demand and order activity, the balance could flip rather suddenly, even if that does not happen till next year.

“Stocks at distributors may still not have fallen sufficiently, but that does not mean that shortages could not occur here and there,” a Dutch observer notes. “For instance, certain qualities, sizes and thicknesses can suddenly no longer be delivered from stockholders because they have not yet received them [from the mills]. This could be because producers have shut down several lines for shorter or longer periods,” he explains.

A buyer of mostly galvanized material at a German fabricator confirms that lead times in some cases are becoming unforeseeably longer: “I wanted to get 400 tonnes on short notice, which was confirmed, but then they could not deliver so far,” he tells Kallanish. “We can place orders for Q1 quite easily still, but if automotive comes back, the mills will raise the bar and possibly won’t deliver to us.”

Automotive and other large customer industries will also soon sit down with mills for negotiations for long-term supply. According to the Dutch manager, mills reportedly want to move to a hot rolled coil base price of at least €800/tonne ($833) and for specific customers, such as cold rolling mills, even €950 to €1,000.

Around the time of the Euroblech fair last month, Kallanish heard similar indications from mills, who were aiming to roll over mid-year prices of above €800. Buyers saw a similar target, with some room for lower-priced deals.

Commenting on the spot market, the Dutch observer underlines that roads may lead either way. “Some insiders are of the opinion that the price recovery will take place in the next quarter, but we cannot yet see clear indicators for this,” he says, pointing at economists’ forecast of a looming recession.

Christian Koehl Germany