German steel market sees Sept prices to rise amid low supply, high costs: survey

German steel producers and traders expect prices to increase over September amid low supply and high costs, according to data from S&P Global Commodity Insights’ monthly steel sentiment survey.

In the survey, traders and producers were seen almost equally bullish on pricing, with the September index at 75 points, up from around 54 points in August.

Both the expectations of producers and traders for a price increase rose to 75 points on the index for September from 58 and 50 points in August, respectively.

One Benelux-based long steel distributor expected prices to firm up amid high energy costs as customers also showed more acceptance of higher prices. “Mills are talking about rescheduling production to cheapest hours. But, even that is not enough to produce enough quantity. So, prices will stay firm or go up,” the distributor said.

One long steel seller source also projected prices to move up amid an expected increase in energy costs.

Platts assessment of TSI Northwest Europe Rebar rose Eur35/mt to Eur990/mt ex-works on Sept. 7, according to S&P Global Commodity Insights data. Platts assessment of European medium sections price (category 1, S235 JR) also increased Eur25/mt on the week to Eur1,250/mt delivered Sept. 8.

“It seems mills are finally reducing capacities rather than offering further discounts,” said a German flat-steel distributor source. “With mills across Europe cutting output, I wouldn’t be surprised to see another attempted price rise in the near term. Energy costs are ridiculous, but demand still hasn’t recovered, so the state of the market is pretty static with an uncertain future.”

“Price direction is definitely upward,” a flat steel producer said. “Buyers recognize we’re moving away from the floor now given production costs, for a lot of mills producing cannot be profitable so increases are necessary.”

Platts assessment of TSI North European Hot-rolled coil was stable on the day at Eur790/mt ex-works Ruhr on Sept. 8, according to S&P Global data.

The index for production outlook increased to 30 points for September, compared with approximately 18 points in August, indicating that market participants expected production levels to increase to meet anticipated demand following the summer holidays. However, this also indicated that mills might continue to operate at lower capacities. Trading sources were more bullish on the production outlook with 35 points for September, compared with 20 points in August, while the index for producers’ sentiment stood at 25 points for the month, compared with around 16 points in August.

Inventory expected to strengthen

The index for German inventory sentiment stood at approximately 41 points, compared with around 34 points in August, suggesting that market participants expected stored steel volumes for September to be slightly higher on the month. Although traders and producers both expressed a bullish trend in inventory outlook for September, traders expected the levels to be stronger, compared with producers at 45 points, up from 35 points in August. The index for steel producers for September stood at around 37 points, compared with 33 points in August.

— Rabia Arif, Benjamin Steven