Northwest European coil market stays tense

Coil buyers in northwest Europe tell Kallanish the current tightness of supply, and the high prices that go with it, will stay for quite some time before turning down. Last Friday’s ArcelorMittal price hike announcement nevertheless caught some off guard, who thought the peak had been reached.

Distributors and their customers are in a race to get volumes secured, and sometimes the price does not seem to matter. “I had cases of twisted digits in price quotes, and the customer did not even see it, or did not mind,” says a German buyer, while complaining about ongoing overtime work to secure volumes.

Under the given circumstances, he believes prices for hot rolled coil will rise close to the target of €800/tonne ($949) announced by ArcelorMittal only on Friday. This should also apply to hot-dip galvanized coil with a targeted €920, and cold rolled coil for likely not much less, he finds, in view of lead times now stretching to over half a year.

This is confirmed by an Austrian player, who gives CRC as an example, with the earliest delivery being September from the domestic mill, and October-November for galv. “CRC and galv are too tight to expect price relief, unless the car factories have a standstill or breakdown, and it does not look like it,” he observes. He was however previously more conservative when forecasting the hike, which he expected to be “10 euros, maybe 20,” and which turned out to be €50 for HRC.

Other observers agree about the domination of the automotive industry, which absorbs the volumes of other sectors. According to another Austrian source, “the situation will relax only once orders from carmakers decrease.”

Christian Koehl Germany