European HDG demand softens as buyers assess pricing viability

European hot-dipped galvanized prices were heard higher in the week ending June 2 as steel mills looked to adapt their pricing strategies to reflect those of market-leading mill ArcelorMittal, having raised HDG and CRC offer prices by Eur20/mt to Eur1,320/mt delivered across Europe May 28.

The chronic shortage of semiconductors seen over the last few months has also resulted in lower automotive demand, with more steel availability for other buyers, sources told S&P Global Platts.

In the Benelux area, some HDG offers were heard as high as Eur1,400/mt ex-works Ruhr, with transactions heard by one service center source at Eur1,350/mt ex-works Ruhr.

“It’s not the price that matters, it’s the delivery times and the possibility of getting material,” the same source said. “It’s difficult to see the prices these days.”

The source also noted a softening in demand as buyers take a wait-and-see approach to determine the viability of ever-changing prices in a heated European market now slowing ahead of the summer slump.

“Most customers know that no one has any material, so they are waiting for projects to start,” the source said. “We hear from other service centers that they are waiting a little bit [to buy], and this says something. If mills receive less orders, I think they will decrease prices — I think. Maybe not this year, but from the beginning of next year, definitely.”

In the Italian market, the supply situation for HDG and CRC was also tight, with a service center source painting a bleak outlook for production given the partial closure of the Liberty Magona steel plant.

“I do expect significant tension on galvanized steel,” the source said.

Mills were heard to be offering at Eur1,285/mt ex-works Italy for CRC, and Eur1,295/mt for HDG, with some said to be asking for even more at Eur1,320-1,325/mt for smaller quantities.

— Amanda Flint