HDG market up on supply shortage, automotive demand uncertainty

The European hot-dipped galvanized market was heard higher Nov. 4 as limited supply and further offer increases from mills props up prices, although automotive demand has had some market participants scratching their heads due to poor car sales among European consumers, sources told S&P Global Platts.

The Platts TSI HDG index was assessed at Eur621/mt ex-works Ruhr Nov. 4 Eur16/mt higher week on week and in Southern Europe, HDG rose Eur6/mt on the week and was assessed at Eur586/mt ex-works Italy.

An Italian mill source was not confident that automotive production would be able to align with the lack of car sales seen during the pandemic, and said the industry was overproducing.

“This is the question we’re asking – the sales just don’t match the production rates,” the mill source said, adding that even with automotive producers offering large discounts on the purchase of electric vehicles, he didn’t see this boosting car sales.

“Car sellers are trying to push sales through [subsidized] leases, so customers don’t need to take out 20,000-30,000 euros,” the source said.

In the construction sector, the same mill source said producers were struggling amid a lack of long-term contracts.

“[The construction sector] recognizes there is no material available and they know lead times are long — I heard that mills are talking between January and February,” the same source added.

An Italian trading source said demand was normal, except for the automotive industry which was “hysteric”. The source attributed higher prices to a “lack of offers, no import, big delays and long delivery times.”

A market-leading European mill was heard to have offered over Eur640/mt ex-works for first offers of 2021.

A Benelux service center source said that automotive demand was still strong but was not certain if it was progressing at the same pace as it had in the last two months.

A European mill source also cited tradable values between Eur610-615/mt ex-works Ruhr for hot-dipped galvanized material, quoting tight supply and full mill order books for the end of the year.

“We’ve seen the schedules for April – we’re completely booked. There’s not a lot of open tons to sell and [the price] should reflect that,” the source said.

— Amanda Flint