German steel market expects prices, inventory levels to soften: survey

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

In the survey, market participants were overall bearish on pricing over the month, with the November index at around 35 points, down from approximately 41 points in October.

Traders and stockholders seemed more bearish regarding the near-term price trends with an index at 30 points compared to the index of 40 points in October, while the index for producers stood at about 40 points for November, compared to approximately 42 points in October.

“I think the mills had a really good start of the year and they figured out that even with current low prices and weak demand it would be better to fill production lines even if they cut prices further,” one flat steel distributor source said.

Platts, part of S&P Global, assessed TSI North European hot-rolled coil flat on the day at Eur650/mt ex-works Ruhr Nov. 3.

“Prices will be more stable in November,” one European long steel producer said. “It might be too early to expect prices to start moving up. We just want to see some positive sentiment from the customers, but I don’t think that we as a producer will be able to lower prices soon.”

“But we are hoping for a stability in energy prices. As you know, there has been a lot of correction in energy levels and they had been moving down because of all the interventions from the [European] governments, so I am hoping that trends will stabilize,” the source said.

Platts assessment of TSI Northwest Europe rebar dropped Eur10/mt to Eur850/mt ex-works Nov. 2. Platts assessment of European medium sections price (category 1, S235 JR) was flat Nov. 2 at Eur1,250/mt delivered.

Market participants expected production levels to be stable as European mills continued to operate at low capacity.

The index for production outlook stood at around 45 points for November, compared with approximately 28 points in October, indicating that production levels were expected to be stable without any indications for a significant increase in mills’ operating capacity. With 50 points on the index indicating a stable trend, the production outlook for trading sources stood at around 40 points, compared with 35 points for October. The index for producers’ sentiment stood at 50 points for the month, compared with approximately 21 points in October, indicating producers expected the current level of production capacity to be stable in the near term.

The long steel producer expected production levels to be stable at lower capacities as mills continued to try to operate at low energy timings, he told S&P Global.

Inventory expected to soften

The overall index for German inventory sentiment stood at approximately 33 points, compared with around 43 points in October. Some producers expected a dip in inventory levels during the month, deviating from traders’ flat expectations, according to the survey.

The index for steel producers for November stood at around 30 points, compared with 50 points in October. Traders’ expectations were unchanged with the index stable month on month at 35 points.

“I think most restocking activity in November is over, so I am not expecting much change in inventory levels,” the long steel producer said, noting that, according to market reports, stockholders were currently reporting inventories worth two month’s levels.

— Rabia Arif, Benjamin Steven