German steel traders and producers expect steel prices to increase during July, according to data from an S&P Global Commodity Insights survey.
The July index for traders’ sentiment stood around 41.67 points, compared with 33.33 points in June, data from S&P Global’s German Steel Sentiment Survey showed. The index for producers’ sentiment was around 50 points, compared with a June index of 20 points, indicating that producers were more bullish on the near-term price trends. The overall index for prices was at about 45.83 points, up from 26.67 points for June.
On the long steel side, sources expected prices to increase in the near term despite weak demand in the market ahead of the upcoming summer holidays, as steelmakers tried to manage high costs.
“Prices have bottomed out. Even if scrap corrects itself by Eur5-10/mt it will not be sufficient to support lower prices. And I don’t think that mills can sell at lower prices anymore,” one long steel producer said.
The Platts assessment of Northwest Europe Rebar increased Eur10/mt week on week to July 5 to Eur580/mt ex-works. Platts’ assessment of European medium sections price (category 1, S235 JR) was up by Eur20 week on week July 5 to Eur820/mt delivered. Platts is part of S&P Global.
In flat steel, market activity was slow both on seasonal factors and sufficient stocks of distributors. The combination of scheduled maintenance at some mills and unplanned production issues at other plants was expected to support the domestic prices. However, the reduction of availability is unlikely to be enough to result in a substantial price recovery, market sources said.
Platts assessed domestic prices for hot-rolled coil in Northwest Europe at Eur680/mt EXW Ruhr July 6, down Eur5 from July 5.
The overall index for German inventory sentiment decreased month on month, reflecting the market’s expectation of lower inventory levels in July, with an index of about 43.33 points, compared with about 49.17 points in June. The index for steel producers for July was around 45 points, compared with 40 points in June. The index for traders’ sentiment stood at 41.67 points for July, compared with 58.33 points in June, indicating that traders and stockholders were more bearish and expecting a significant drop in inventory levels.
One long steel producer expected inventory levels to remain stable during the month of July, adding that customers are only buying what they needed and were not particularly focused on restocking activity ahead of the summer holidays.
Market expects production levels to decrease
Sources expected production in July to soften month on month. The index for production outlook was around 16.67 points for July, down from 35.83 points for June. The index for traders’ sentiment was around 8.33 points, compared with an index of 41.67 points in June. The index for producers’ sentiment was around 25 points, compared with a June index of 30 points, indicating that traders and stockholders were more bearish on near-term production levels in the market.
European steelmakers were expected to close facilities for planned maintenance during the summer holidays affecting the overall production levels in the market. Meanwhile, some steelmakers were also planning ad-hoc stoppages in efforts to control costs and balance the supply and demand situation in the market
“Normal maintenance breaks are planned for the third week of July so that might lower production levels. But that would be normal for this time of year,” one long steel producer said.
Author Rabia Arif
