With the start-up of two new German hot-dip galvanizing lines with a joint capacity of more than 1 million tonnes/year, the galv market might see some overcapacity next year.
“That is a question we all are wondering about,” an Austrian buyer of coil says. Any effect on market supply and prices will not be felt until sometime next year, though, he believes, adding: “We [already] have some oversupply anyway.”
A Swiss source states that he can reasonably assume HDG is going to be under pressure soon. “There’ll be no huge drop, but a slow decrease can be expected in the next weeks,” he tells Kallanish. In recent months, HDG prices kept up a façade of strength because they have been under less pressure from imports than hot rolled coil, meaning the price premium between the two grew unnaturally.
Despite reservation from carmakers, HDG from northwest European mills has not substantially dropped below €800/tonne ($828) ex-works, compared with the low of €600 seen for HRC. One German buyer notes that €800 was a fair price in recent weeks for material available from stocks, while new rollings in the first quarter could range between this level and €850.
Such diverging assessments may each come true in their own respective right, with more stable prices for new rolling, but also frequent bargain offers on the spot market. An argument in favour of price stabilisation comes a northern mill source, who points to the high energy consumption and costs involved in this process. “Regardless if the car industry recovers or not, mills will be considering whether closing production is a better option than producing, if prices are too low.”
Christian Koehl Germany