Northwest European coil nears crossroads, automotive outlook improves

An increasing number of northwest European coil market players believe prices are close to bottoming and will soon rebound. However, this belief is not without doubts.

According to a manager at a Benelux service centre, “more and more customers have come to realise that steel prices seem to have bottomed out.” He is convinced that “northern EU steelmakers seem determined not to accept further price cuts.”

The assumptions are that distributors cannot wait too much longer before replenishing stock, and that the automotive industry will have its comeback in the second half-year, now that semiconductor chip shortages are seemingly easing.

“In the second half-year, the OEMs mean to catch up on the dry spell of the first half, and then we could see shortages of coil and sheet,” a buyer at a German automotive supplier tells Kallanish. “That’s what we hear from the tier-1 suppliers with direct contact to the OEMs. And service centres confirm what we see in rebounding call-offs.”

By means of anecdote, he tells how he saw 5,000-6,000 Mercedes Sprinter units parked on a lot by a Düsseldorf sports stadium for months and months, waiting for missing parts to be completed. “When I came there last week, they had nearly all disappeared, apparently now completed for the market,” he observes.

A mill source essentially shares the optimism for recovering carmaking activity. But he warns that looming energy shortages suggest activity will go the opposite way, and could halt business at OEMs and their suppliers, as they have done to mills already.

While buyers refrain from making predictions on price developments, the mill source gives some rough values, with hot rolled coil pointing over €850/tonne ($867) ex-works, cold rolled coil over €900, and galv over €1,000. Market observers anticipate hikes in offer prices by €50 soon (see Kallanish 19 July).

Christian Koehl Germany