German steel market expects prices to strengthen, inventory to remain low: survey

German steel traders and producers unanimously expected steel prices to strengthen during December as mills tried to aim for higher prices, according to data from an S&P Global Commodity Insights survey.

The December index for traders’ sentiment stood at 80 points, compared to 60 points in November, data from S&P Global’s German Steel Sentiment Survey showed. The index for producers’ sentiment was at 81.25 points, compared with a November index of 75 points. The overall index for prices was approximately 81 points, up from 67.50 points for November.

Overall, steelmakers in Europe were aiming for higher prices for steel products. One long steel distributor source reported that long steel producers were aiming for higher prices for January deliveries amid seasonal low demand as the end of the year neared. The source expected long steel prices in Germany to gain during December, adding that mills were trying to book orders at elevated prices amid high costs including scrap, energy hikes and increased transportations costs.

The Platts assessment of Northwest Europe Rebar was up Eur15/mt week on week to Dec. 7 at Eur620/mt ex-works. Alongside, Platts’ assessment of European medium sections price (category 1, S235 JR) increased Eur10/mt week on week on Dec. 7 to Eur760/mt delivered. Platts is part of S&P Global.

On the flat steel side, good order books of European steelmakers and lack of competitive imports supported domestic hot-rolled coil prices. Platts assessed domestic prices for hot-rolled coil in Northwest Europe up Eur5/mt day on day to Eur690/mt ex-works Ruhr on Dec. 8.

Production levels to remain low

Sources reported that mills were offering February and March shipments for flat steel products amid good orderbooks, however, buyers were reluctant to build inventories amid uncertainties about prices in the near-term.

“The market has slowed down now as buyers don’t want to build stocks and the mills are focused on long-term contract negotiations,” a flat steel trader said. “The buyers are also concerned that an increase in production would put an end to price recovery.”

The overall index for German inventory sentiment showed slight softening, reflecting market’s expectation of continuous low inventory levels in December, with an index of 35 points in December, down from approximately 36.67 points in November. The index for steel producers for December was at 25 points, compared with approximately 33.33 points in November. The index for traders’ sentiment stood at 45 points, compared with 40 points for November, showing that producers were more bullish regarding the near-term trend compared to traders.

Market expected European steelmakers to continue to operate at low capacities during December as demand was seasonally slow at the end of the year.

The index for production outlook was around 30.63 points for December, compared with 30.83 points for November. The index for traders’ sentiment was at 30 points, up from 20 points in November. The index for producers’ sentiment was at 31.25 points, down from 41.67 points in November, as producers were more bullish regarding production activity compared to traders.

Author Rabia Arif