Shortages unclear despite outages, say EU coil sources

Northwest European coil market observers diverge over whether the supply disturbances at ArcelorMittal Spain and France, as well as Tata Steel’s IJmuiden works will necessarily mean shortages.

Concerns are mainly being expressed from buyers of domestic qualities that cannot easily be replaced by imports. “The lead times of mills will be stretching, and prices will increase. Shortages may occur quickly. Some buyers are waiting, banking on falling prices, but I do not think that is a good idea,” a manager of one service centre says.

A manager at a cold-roller company concurs, adding that Salzgitter’s temporary closure of one big blast furnace for a reline will add to the picture. “The mills are pretty well utilised; I hear of delivery times in July/August already. This will be reflected in spot prices,” he tells Kallanish. He says offers of €900/tonne ($983) for hot rolled coil, as heard from Italy already, will come further north in April, but does not comment on whether the market will accept them.

So far, buyers see €850/t as a realistic price, while general distributors tell of lower-priced transactions. That group of observers comes to other conclusions regarding supply security. “There are some cases [of disruption], but I do not see grounds for panic,” one German buyer opines. “Most mills so far have been operating at partial capacity. And there is too little demand to bring prices up sustainably.”

He believes Italy has sufficient capacity to fill in for shortcomings at other countries’ mills. Given the damage elsewhere, “I would say roughly 200,000 tonnes could be out of the market now. That does not make much difference in the larger picture. Acciaierie d’Italia could reactivate twice that in a matter of some weeks,” he comments.

Christian Koehl Germany