Full inventories hurt northwest European service centres

High stock levels are putting northwest European steel distributors, especially coil service centres (SSCs), in an awkward position on the intake as well as on the selling side.

They have little ambition to fill a full house with even more material, which makes them bad customers for mills upstream these days. If they do buy, it is only at low prices. But they are keeping discreet about it as they want to maintain the image of higher prices to their customers downstream.

“SSCs have plentiful material in their inventories which they bought at peak prices, so of course they try to get a good euro for it,” an observer from a regional mill tells Kallanish. According to European distributors’ association Eurometal, stocks at steel service centres in the EU expressed in days of shipments reached 63 days in October, up from 57 days in October 2020.

German SSCs have stood out from the crowd recently, citing relatively high prices from mills and denying that hot rolled coil can be had for less than €970/tonne ($1,097). This contrasts to transactions of €930 cited by a German multi-purpose distribution group. A Dutch service centre manager even sees the low end at €900, on the assumption that prices in the Benelux tend to be below those in Germany.  

An explanation for this spread comes from a buyer of an automotive supplier, who doubts SSCs are all truthful with the figures they cite. “Their statements are diplomatic. They have their houses fuller than ever, and do not want to sell the expensive material too cheaply. For them, it is legitimate to make the market believe that mills’ prices are still close to their peaks,” he comments.

Christian Koehl Germany