Buyers of coil products in north-western Europe tell Kallanish that lead times are already long, and already stretching until the end of the second quarter. That picture may be altered by the evolving coronavirus issue, but its projected influence cannot easily be assessed.
The high degree of utilisation at the mills was preceded by what one service centre manager calls a “… historic low in inventories” at the end of 2019. Earlier this year, all service centres had restocked with some urgency, “… so that temporarily we were facing lead times of four weeks. – I have never seen that,” he tells Kallanish.
The second quarter appears to be practically sold out so, “… you won’t get anything before July, and that applies to all coil categories,” he says. Other sources largely agree, although maybe to a different extent. Some say it is a question of price if volumes are required urgently. This would explain the price spread, they suggest.
Mills recently claimed that €520/tonne ($561/t) ex-works was a viable price for HRC and €620/t for HDG, which many buyers deny. Such peak values are quite likely achieved in urgent cases, while otherwise €480/t or €580/t respectively are a more likely target for big buyers. “The truth is probably in the middle,” the manager says. “The upward trend in prices has halted for two weeks now, but mills are still not willing to discuss price reductions,” he observes.
German consultant Andreas Schneider points out that the good utilisation says little about real market demand in the longer run. In accord with the manager, he suggests that it is mainly the busy end of a restocking cycle.