German steel market expects higher prices in autumn

German steel traders and producers expect steel prices to increase during September, according to a monthly S&P Global Commodity Insights survey, as activity typically picks up after the summer holiday season.

The September index for trader sentiment was 68.75 points, compared to 45 in August, data from S&P Global’s German Steel Sentiment Survey showed.

The index for producer sentiment was at 50 points, up from 41.67 for August, indicating traders and stockholders were more bullish on near-term price trends.

The overall September index for prices was 59.38 points, up from 43.33 for August.

While steelmakers aim for higher prices as buyers return seasonally, mills have this year been faced by low demand, particularly from the automotive and construction industries, amid an uncertain outlook at a time of high ferrous scrap and energy costs, sources said.

“The mills officially offer higher prices,” one flat steel trader said. “But service centers affiliated with the steelmakers have been simultaneously offering coil with a significant discount.”

A European mill source said: “There are no signals that the prices would recover, no big changes in raw material and other costs and demand.”

Platts assessed hot-rolled coil down Eur10/mt ($11/mt) day on day at Eur655/mt ex-works Ruhr on Sept. 6, according to S&P Global data.

The Platts assessment of Northwest Europe rebar Sept. 6 was up Eur15/mt week on week to Eur580/mt ex-works. On the other hand, Platts assessed European medium sections (category 1, S235 JR) down Eur20/mt week on week to Eur790/mt delivered.

The overall index for German inventory sentiment increased to 45.63 points from 36.67 in August, reflecting market expectations of a recovery in inventories.

The index for steel producers was 35 points, compared with 33.33 points in August. The index for trader sentiment stood at 56.25 points, up from 40 for August.

Although distributors were expected to restock in September, the demand recovery is unlikely to be sustainable, sources said.


Production levels

Sources expected mills to increase production during September, but to remain at relatively low levels.

One long steel distributor source said mills were aiming to increase prices for long steel products in the wake of strong scrap and higher energy costs. “They will either increase prices or lower production or maybe do both,” he said.

The index for the production outlook was 33.75 points for September, up from 15.83 points for August, while trader sentiment was 37.50 points, compared with 15 points in August. The index for producer sentiment was 30 points, compared with an August index of 16.67.

Author: Rabia Arif