German steel market expects prices to remain firm: S&P Global survey

German steel traders were more bullish on price trends over January than producers, according to S&P Global Commodity Insights’ monthly steel sentiment survey.

Producers also expected prices to increase but to a lesser extent than traders, the survey found.

The January index for traders’ sentiment was 78.5 points, compared to 75 points in December. The index for producers’ sentiment fell to 68.75 points, from 75 points in December. The overall January index for prices was 74 points, from 75 points in December.

“Expectations are somewhat positive, especially on the sell-side. Mills are increasingly firm on what offers are available, and sentiment is that prices will increase, not to the same extent as last year or the year before but some people do still have those rallies in the back of their minds — they are not looking to restock fully and are keeping some things open for if prices go the other way,” one German flat steel distributor said.

Platts assessed TSI North European Hot-rolled coil unchanged day on day at Eur700/mt ($742/mt) ex-works Ruhr on Jan. 5, according to S&P Global data.

One long steel producer said the mill planned further prices hikes in January.

“Costs are high and with uncertain forecasts for energy and scrap prices, we just cannot produce like this any longer. We are already cutting down production,” the source said.

Platts weekly assessment of TSI Northwest Europe Rebar was unchanged at Eur745/mt ex-works on Jan. 4, according to S&P Global data, while European medium sections (category 1, S235 JR) was unchanged at Eur980/mt delivered.

The overall index for German inventory sentiment stood at 44 points, down from 41 points in December. Traders and stockholders were bullish regarding expected inventory levels during the month, while producers remained firm on their expectations on month.

The index for steel producers for December was stable at 37.5 points. The index for traders’ sentiment stood at 50 points for January compared to 45 points in December.

“A lot of restocking was done in December so activity could struggle in January. The macro picture remains ugly, we see this as a restocking rally following such a brutal sell-off last year,” one flat steel trader said.

One long steel distributor expected inventory levels to increase during January adding that there is a need for restocking in the market.

“Inventories are low,” the long steel producer said. The source noted that, according to the market information, medium section distributors reported low to medium stocks and were awaiting greater clarity on prices.

“They think prices will drop further but I do not see prices bottoming out anymore. So, they will need to restock in January,” the source said.

Production levels

Market participants continued to expect production levels to soften over the month of January. The index for production outlook stood at 27 points for January, compared to 30 points in December. Producers anticipated a stronger decline in production levels with an index of around 12.5 points for the month, compared to 25 points in December.

Traders and stockholders, however, expected production levels to strengthen according to the survey, with a current index of 43 points, compared to 35 points in December.

“A lot of mills are planning extended maintenance … so will be opening late in January, which would mean that production levels will be low for the month,” the long steel producer said.

“Mills have a longer shutdown period and will only start production in the second week of January,” the long steel distributor source said adding it should lead to lower production levels during the month.

— Rabia Arif