HDG prepares for Q1 hikes on signs of auto contract finalizations

North European hot-dipped galvanized steel prices were lower in the week to Nov. 17, as mills look to make their last discounts on previously agreed automotive material now back in circulation.

There has been minimal pricing pressure on HDG products following weak automotive production, with the supplementary demand from other industries building momentum, accompanied by expectations of renewed automotive demand in the first quarter, sources told S&P Global Platts.

Participants across the supply chain are taking the first signs of auto contract finalizations as the directive for the European steel market in Q1, with some buyers hesitant to purchase ahead until prices are widely announced, due to concerns about the viability of domestic demand. Some original equipment manufacturer contracts were heard finalized between Eur1000-1050/mt delivered Europe — the general market expectation.

“There are no more discounts and now mills are facing issues with logistics; the ports are inundated with material and there are restrictions with vessels,” a European mill source said. “We are just offering for Q1 now — not offering too much spot — everyone is in wait and see mode. People just want automotive contracts finalized.”

The source said he expected this year’s auto contracts to have a Eur600-650/mt premium over the previous year. For cold-rolled coil, Eur1200/mt was the confirmed price in some signed contracts from OEM, the same mill source said.

Mills were heard to be taking positions for export, with the door to the US market wide open to European suppliers.

“Mills starting to offer actively, US prices are still super high,” the mill source said. “There are some opportunities to move volumes there and get good deals as opposed to Europe.”

In Italy, spot prices were heard slightly lower, as mills look to alleviate the shortfall in auto demand and uptake in spare auto volumes, with prices earlier in the week heard between Eur1100-1130/mt ex-works Italy.

A second European mill source said that he expects the semiconductor shortage to resolve by the first half of next year and the excess HDG material to be cleared by Q1.

“Demand will pick up and we will have a new market. Energy prices are increasing, transport logistics are heating up,” the mill source said. “Prices aren’t falling any more, since weeks we have been stable on same level, we can increase prices because raw materials, transport, energy, is all pointing toward uplift.”

— Amanda Flint