German steel market expects prices to soften, production levels to increase: survey

German steel traders and producers expected prices to trend lower over February, according to data from S&P Global Commodity Insights’ monthly steel sentiment survey.

The February index for traders’ sentiment stood around 50 points compared to almost 78.50 points in January. The index for producers’ sentiment was around 58 points, compared to a January index of 68.75 points. The overall index for prices was at approximately 54 points down from 74 points for January.

“Currently mills are being pressured to achieve higher prices, but the market doesn’t seem ready for it,” one European flat mill source said. “The current transactional level is stable, but buyers aren’t going to be receptive to repeated increases, especially if capacities do continue to come back online across Europe.”

A flat steel distributor source said: “If prices come up too fast, not only will we lose the market share to imports, but buyers will retreat again, especially if production comes back. Sentiments are not hugely positive for the second half of the year.”

Platts assessed TSI North European hot-rolled coil up Eur5/mt on the day Feb. 3, at Eur755/mt ex-works Ruhr. Platts is part of S&P Global.

One long steel producer said prices for long steel are almost at the bottom, and he expects them to stay stable during the month. The source also expects demand to start picking up adding that the month of February might see a slight increase while the month of March may show real improvement

“A lot of projects are on hold, so demand has to come back,” he said. “Everyone is waiting for demand.”

A long steel distributor source noted that prices were in a downtrend due to limited end-user demand.

“End-users are holding back,” he said, adding that amid high energy costs and weak demand market was seeing low prices.

Platts assessed TSI Northwest Europe rebar down Eur20/mt to Eur715/mt ex-works on Feb. 1. Platts assessed European medium sections (category 1, S235 JR) down Eur10/mt on Feb. 1 to Eur970/mt delivered.

The overall index for German inventory sentiment was almost stable on month, with an index of approximately 43 points compared to 43.75 points in January. The index for steel producers for February was around 42 points, compared to 37.50 points in January. The index for traders’ sentiment stood at 43.75 points for February compared to 50 points in January.

Production levels expected to increase

The index for production outlook stood at around 58 points for February, compared with 27 points for January. Producers anticipated a stronger rise in production levels with an index of around 54 points for the month, compared to 12.50 points in January.

Traders and stockholders also expected production levels to strengthen according to the survey, with a current index of around 62.50 points, compared with approximately 43 points in January.

One long steel producer noted that mills were operating at lower capacities to manage high energy costs and he expects mills to continue operating at reduced capacities.

However, amid restocking activity seen in December and January on the flat steel side, some mills are perceiving increased demand and are considering or in the process of bringing capacities back online. However, some buyers fear that this uptick in demand is illusory — driven by traditional restocking cycles rather than supportive end-consumption.

— Rabia Arif, Benjamin Steven