HDG could see deeper dip in northwest Europe

Coil prices are virtually in freefall in Europe and elsewhere, although it seems that galvanized material is holding up better than hot and cold rolled coil.

This could change in the third quarter, a buyer at a German fabricator company believes. His company buys mainly plain galvanized grades, but currently has to wait in line. “Domestic integrated mills do not like to do plain grade much, as long as they get better orders from the automotive industry,” he tells Kallanish.

The relative tightness of plain HDG is largely attributable to the recent malfunctions and accidents at two ArcelorMittal mills and Tata Ijmuiden, which put a limitation on input material supply. Sources in Germany and the Benelux see the current price for galv still reaching €900/tonne ($970) ex-works, while HRC appears to be sinking under €800/t now. Against that, CRC appears to be the weakest item, with a premium barely exceeding €50 over HRC, sometimes less.

The tightness should be resolved once the repairs have been successful, which some say is a matter of only a few weeks, possibly less than that. “At present, mills are utilised for the third quarter, and are not taking orders yet for the fourth,” the German galv buyer says. “But by then, the furnaces will be back on stream, and then there will be a bashing for orders, especially with those low-priced imports around.”

In fact, his company, located in Lower Saxony, would be able to get galv material from Vietnam or Korea, possibly even in the third quarter still, if the quotas allow. The price here is also €900 – but delivered to the doorstep, including slitting/cutting from an intermediate service centre. Land delivery plus processing itself costs at least €70, indicating the cfr Antwerp price would be at around €830/t, he notes.

Christian Koehl Germany