German steel market observers are calling for better communication among players along the value chain to better harmonise the gaps in supply and demand.
In a move unusual for a distributor, Günther+Schramm, based in Oberkochen and Mannheim, has addressed the issue in an open letter to customers. The company is mainly dealing with special bar qualities (SBQ), which are subject to similar shortages as coil products, partly for the same reasons, like production levels that do not match demand.
In addition, managing director Bernd Seibold mentions an “extreme reduction of transport capacity”, especially in road haulage, plus restrictions for border-crossing traffic due to Covid-19. “Currently, products ready-for-dispatch need two to three weeks from mills in Europe to our warehouses,” he states. Apart from the delay, “this leads to considerable extra costs in the supply chain,” Kallanish hears from Seibold.
He pleads for “intensive communication” with suppliers as well as customers to come to terms with the issues, and to avoid faulty decisions. “And this should be possible for remote working too,” he says.
Seibold is in line with consultant Andreas Schneider of Stahlmarkt Consult, who pleads for “fair solutions worked out in cooperation”. Without naming mills directly, in his blog Schneider criticises suppliers for not delivering the volumes laid down in long-term contracts. “This may not be true across the board, but these are not just singular cases either,” he writes.
Both observers note that many buyers pressure themselves with securing material, which aggravates the situation, so that “inventories cannot be reasonably re-stocked,” Seibold notes.
Thyssenkrupp Steel recently addressed the problem in a circular to its customers. The scheduled restart of its capacities “was complicated by the fact that many customers ordered larger volumes than originally planned”, it said. Because of this highly volatile order structure, the company claims it sees “daily changes in our planning”, and can provide information on delivery dates only with a delay.