German steel market expects prices to strengthen, inventory to remain weak in Nov

German steel traders and producers expect steel prices to remain strong in November with mills aiming for higher prices, according to an S&P Global Commodity Insights survey.

The November index for traders’ sentiment stood at 60 points, compared with 62.50 points in October, showed data from S&P Global’s German Steel Sentiment Survey. The index for producers’ sentiment was at 75 points, compared with an October index of 62.50 points, indicating that producers were more bullish on the near-term price trends. The overall index for prices was at 67.50 points, up from 62.50 points for October.

Overall, steelmakers in Europe were aiming for higher prices for steel products. On the flat steel side, sources reported upbeat market sentiment, however, real demand remained low. For hot-rolled coils, sources reported that European steelmakers were trying to maintain limited spot trade activity in efforts to better position themselves for long-term contract negotiations.

“Mills would rather trade less on spot but have prices higher to have an argument in contract discussions,” a mill source said.

Platts assessed domestic prices for hot-rolled coil in Northwest Europe stable day on day at Eur650/mt ex-works Ruhr Nov. 10, showed S&P Global data.

One European long steel producer told S&P Global that mills had been announcing price increases for long steel products amid high production costs. He reported that producers had been successful in booking transactions at elevated levels, while some customers continued to resist higher offers.

The Platts assessment of Northwest Europe rebar was up Eur5/mt week on week at Eur600/mt ex-works Nov. 8. On the other hand, Platts’ assessment of European medium sections price (category 1, S235 JR) was stable week on week at Eur770/mt delivered Nov. 8.

Meanwhile, sources reported that the market might be avoiding restocking activity given weak seasonal demand at the end of the year. One long-steel distributor reported that inventory levels were low and customers might maintain them since demand is usually slow as the year ends.

The overall index for German inventory sentiment showed little improvement, reflecting the market’s expectation of low inventory levels in November, with an index of approximately 36.67 points, compared with 34.38 points in October. The index for steel producers for November was at approximately 33.33 points, compared with 25 points in October. The index for traders’ sentiment stood at 40, compared with 43.75 points for October.

Production levels to remain low

The market reported that European steelmakers might maintain low production levels in November due to different factors, including slow seasonal demand at the end of the year. In addition, sources reported that some flat steel producers might restart production in the coming few months amid concerns that increased availability combined with unchanged real demand would result in a price drop.

The index for production outlook was around 30.83 points for November, compared with 28.13 points for October. The index for traders’ sentiment was at 20 points, down from 31.25 points in October. The index for producers’ sentiment was at 41.67 points, up from 25 points in October.

Author: Rabia Arif