Many observers of the European coil market north of the Alps suspect that steel mills are keeping output lower than they would in a typical summer without the current numerous factors of uncertainty.
“Weakened demand for steel combined with the reservation of buyers, low import prices and a sharp rise in energy costs have made many steel producers decide to limit production capacities,” a Benelux manager believes. “Some do not speak of production cuts, but seem to have introduced them anyway.” This assessment gets the backing of other observers.
Inquiries from Kallanish to mills did not receive any replies beyond statements of outages previously announced, for example due to repair.
According to the Benelux manager, one German company is reported to be taking some of its galvanising lines out of production for some time. This would explain the relative strength of galv prices in comparison to cold rolled coil. He sees the price for hot-dip galvanized coil starting at €1,000/tonne ($1,025) ex-works and stretching to €1,050.
Interestingly, a mill source gives a more modest value of €980. This, however, is still much more than the conventional €100/t above hot rolled coil prices, which are now at €800 in Austria and €850 in northern Germany and the Benelux.
CRC has been lagging behind, with a low at around €900/t or less, but is seen re-widening the gulf to HRC now on recovering demand from carmakers. The mill source notes that the galvanizing process consumes substantial natural gas that is now becoming scarce, which puts the brakes on output.
A manager at an Austrian service centre remains critical about the prevailing hope for rebounding prices. “My belly feeling does not see them pick up notably in July or August – unless there is bad news on the gas supply front. If that’s the case, we will have bigger problems altogether.”
Christian Koehl Germany
