German steel market expects price levels to soften in Oct

German steel producers and traders expect prices to soften over October amid weakening costs, according to data from S&P Global Commodity Insights’ monthly steel sentiment survey.

In the survey, traders and producers were seen almost equally bearish on pricing, with the October index at 41 points down from 75 points in September.

Prices were unanimously expected to soften, and traders seemed slightly more pessimistic on the near-term price trends with an index at 40 points compared to the index of 75 points for September. The index for producers stood at 42 points for October compared with 75 points in September.

“Prices will come back up with demand, but prospects aren’t looking fantastic,” said a flat steel trader source. “Everyone is still focusing on getting inventories down so no one’s buying. I think things will be down for the rest of the year with recovery in the first quarter.”

The Platts assessment of TSI North European hot-rolled coil was down Eur15/mt on the day at Eur710/mt ex-works Ruhr on Oct. 7, according to S&P Global data.

“I see a bit of weakening in prices,” one long steel producer source said, adding, “in October, energy prices seem to be lower so prices [for long steel products] might be moving down, but the real challenge will be the winter season in November and December when energy prices are expected to move higher.”

One Benelux-based distributor source for long steel products also expected prices to move further down as energy costs seemed to be softening.

The Platts assessment of TSI Northwest Europe rebar dropped Eur20/mt to Eur935/mt ex-works on Oct. 5, according to S&P Global data. The Platts assessment of European medium sections price (category 1, S235 JR) also decreased Eur10/mt on the week to Eur1,215/mt delivered Oct. 5.

The index for production outlook slightly softened to around 28 points for October, compared with 30 points in September, showing that mills might continue to operate at lower capacities. Trading sources were expecting mills to continue to operate at lower capacities with a production outlook of 35 points, stable compared to September. The index for producers’ sentiment stood at approximately 21 points for the month, compared with 25 points in September.

“Let’s see how the economy in Germany unfolds. There are a lot of factors involved,” the long steel producer said, adding that mills might cut production capacities that was already happening, to deal with low demand.

Inventory expected to strengthen

The overall index for German inventory sentiment stood at 43 points, compared with around 41 points in September. Some producers expected a stronger recovery in inventory levels during the month, compared with trading sources.

“Inventory levels, from what I hear, are around low to normal, so customers might start restocking, which will lead to higher inventories [in October],” the long steel producer said.

The inventory outlook index for steel producers for October stood at 50 points, compared to 38 points in September. Traders were more bearish in the sentiment, with the index at 35 points for October, compared to 45 points in September.

— Rabia Arif, Benjamin Steven