Sales volumes of flat steel at German stockholders fell heavily in May as demand weakness continued, according to data from German stockholder association BDS.
While sales volumes of long steel saw a 14.2% year on year drop to 253,789 mt in May, flat steel decreased 34.6% to 359,533 mt, the lowest level since December 2019, according to the data.
The German steel market came to a near-halt in spring due to a demand drop that was felt strongly by suppliers of the automotive industry.
Since March, sales have been declining at stockholders as they scramble to get new bookings following the peak of the pandemic.
Market sources said that although customers were making more inquiries in recent weeks, sales negotiations were still virtual or by phone as most do not accept any visits and customers were also holding back on placing new orders.
Stock volumes for long steel were up 5.8% year on year at 826,263 mt in May, a decrease of 11.8% from April. Flat steel stocks fell 16.8% to 1.29 million mt in May compared to the same month 2019. Flat steel stocks increased 4.6% from April.
“I do notice that volumes we are talking about in contracts are smaller but the length of contract is the same. We have 40-60% fewer volumes. Every one of our customers has less demand,” said a German flat steel distributor.
Other stockholding sources said they were themselves holding back on restocking as they fear that steel price falls have not reached the bottom yet. Although German mills were willing to make considerable price concessions, buying activity on all sides of the supply chain was limited amid underlying economic weakeness despite generous financial stimulus from the German government.
Fears of a second wave of the pandemic are also growing as Germany’s reproduction rate went up to 2.88 on June 21 following higher infection rates in some areas of the country, which could spark fresh lockdown measures.
— Laura Varriale
