More HDG material available as auto demand winds down, mills do not offer

With automotive demand slowing down, more hot-dipped galvanized steel has freed up in the market Sept. 8, with peripheral sectors once in need now able to get their share of material. Prices were stable, with some in the market fearing falling prices.

Most mills had nothing left to sell for HDG, with prices quoted around Eur1,300/mt ex-works Ruhr and automotive production lower than expected due to the semiconductor and chip shortage.

“Automotive are producing and they have full orderbook so its only postponed — the problem is raw material shortage and semiconductors,” a European mill source said. “Spoke to a customer and he said there would be another two years of this problem.”

Automobile contract negotiations began last week, with the market expecting prices to double from 2021 agreed contracts.

“It’s a lot more than we thought,” the mill source said, with offer prices heard between Eur1,100-1,250/mt.

“It was always good to do automobile business because you had fixed volumes for a stable price, but now volumes are not fixed and it is difficult to get a deal that assures certainty on longer-term pricing contracts,” the Benelux-based mill source said, adding that demand fluctuations had a considerable impact on negotiations.

According to data from the Verband der Automobilindustrie, 193,300 new passenger cars were registered in Germany in August — 23% less than in the same month of 2020.

Automobile manufacturers were scaling back their production, with one Italian company heard to be shortening its production to just five days due to the shortages.

Mills without anything to sell were heard offering HDG at Eur1,400-1,450/mt ex-works Ruhr to prevent further customer inquiries.

“We are at Eur1,400-1,450 with our offers, but I know if I try at this price, I won’t get anything,” a second European mill source said. “We are not making deals; we haven’t concluded any spot.”

— Amanda Flint