EU Steel Distribution faces continued weak demand, with upward shift in price expectations
The EU steel and metals distribution sector remains cautious as we approach the end of 2024.
While current activity levels remain stable, future activity is expected to weaken. Distributors are maintaining a conservative approach to inventory, aligning stock levels with anticipated market softness. However, there’s a notable shift in price expectations, with some respondents foreseeing stabilization or slight increases, suggesting that price pressures might ease as the market recalibrates.
Overall, while the industry braces for subdued demand, there is a glimmer of potential price resilience, which could provide stability as distributors navigate this challenging period.
Assessment of Current Activity
Responses are consistent with previous months, possibly reflecting a stabilization or slight dip in current activity levels. The general trend remains below the neutral line, suggesting that the sector is still operating at a cautious activity level, with no significant improvement.
Future Activity Forecast
Downward trend continues: October responses show a continuation of the pessimistic outlook for future activity. Most responses are positioned below the neutral line, following the downward trend observed in recent months.
Weak expectations for the coming months: The future activity sentiment indicates an expected decrease as we move toward the end of 2024. This sustained downward trend suggests that distributors anticipate a prolonged period of weak demand.
Stock Position Forecast
Steady or slight decrease: Stock positions for October remain stable, with only slight variations from previous months, indicating a conservative approach to stock management.
No aggressive restocking: Respondents show no intentions of significantly increasing stock levels, reflecting a focus on maintaining or slightly reducing inventories in anticipation of lower demand. This pattern underscores a cautious stance, as distributors are reluctant to commit to higher stock levels amid uncertain market conditions.
Price Development Expectations
Shift in price sentiment: October’s responses indicate an upward shift in price expectations, with answers positioned closer to the neutral line and slightly above it.
Potential stabilization or increase: Unlike previous months, where sentiment leaned toward declining prices, October responses show a more balanced or slightly positive outlook on price developments, possibly due to market adjustments or expectations of supply limitations. This change may reflect a belief that prices could stabilize or increase slightly as distributors adapt to market realities and adjust supply strategies accordingly.
This analysis is based on the EUROMETAL Sentiment Survey, reflecting the opinions of 251 participants. Interested in our Sentiment Tool? Contact us.
EU mills gain processed coil share from distributors
European stockholding distributors and steel service centres have conceded some share of the coil market to mills and their direct supply to consumers. This applies to cold rolled and galvanized coil more than to plain hot rolled coil, Kallanish learns from statistics issued by distributors association EUROMETAL.
“Direct mill sales improve their channel position gradually the further wide strips are upgraded by cold rolling and coating,” the association writes in a recent research paper.
Of all HRC sales in the EU, the share of mill sales directly to customers in 2023 was 23%, while that of steel service centres was 40%. The statistics also consider “mill sales as pre-material” – such as for tubemakers – which took a 24% share. The remainder (13%) was sold by stockholding distributors – Multi-Product & Proximity Steel Distribution – which play a lesser role in terms of volume.
The picture shifts for further processed coil. For CRC, mills took a share of 41%, with 42% taken by SSCs. Mill sales as pre-material obviously play a lesser role for processed coil; the share of CRC here is a mere 6%. Mills score highest on coated coil, with a share of 49%, against 30% taken by SSCs.
In total, of all strip products taken together, mills, in their direct-to-customer sales, lifted their share from 34% in 2021 to 36% in 2023, totalling 22 million tonnes. The share of SSCs in that two-year period dropped by the same rate, from 38% to 36%, also totalling 22mt.
EUROMETAL notes that distributors play an overall bigger role in sales of long products, for which they account for 75% of total EU supply (see European distributors lose volume in 2020s – 20 August).
Christian Koehl Germany
European distributors lose volume in 2020s
Geopolitical tensions, trade disputes and steel trade measures have disrupted formerly well consolidated supply channels, at the cost of stockholding distributors and service centres (SSCs), European distributors’ federation EUROMETAL says in a recent research paper.
The EU steel distribution sector has experienced a marked contraction, with business volumes decreasing from 77 million tonnes in 2021 to 62mt in 2023. The downturn was particularly pronounced in the Multi-Product & Proximity Steel Stockholding Distribution segment, which saw a reduction from 47mt in 2021 to 37mt in 2023. Service centres’ supply volume in 2023 was 25mt.
EUROMETAL assesses the overall European steel supply potential – what it calls the typical steel distribution product portfolio market – at 116mt in 2023. This compares with 117mt in the 2020 pandemic year, 138mt in 2021 and 121mt in 2022. However, of this total, nearly half is served by mills, with 54mt supplied from mills directly to end users in 2023.
The decline in recent years is attributed to a combination of factors, like the economic downturn, supply chain disruptions affecting production and consumption patterns, geopolitical tensions and trade disputes, EUROMETAL notes. However, “steel distribution remains a vital component of the supply chain, as it offers essential services such as stockholding, processing, and value-added solutions to customers,” the association affirms to Kallanish.
Looking at the typical product groups, EUROMETAL notes that service centres continue to be a major player, accounting for 44% or 21.9mt of strip product supplies to the general industry, automotive, and construction sectors. The end-user quarto plate market saw 3.8mt supplied by stockholders and SSCs, with 4.1mt sold directly by mills to end-user segments.
For long steel products, distributors maintain a dominant share of 75% (22.8mt) in supplying to end users, while direct mill sales to end users accounted for only 7.5mt. The market for tubular steel products, totalling 10.6mt in 2023, was equally supplied by EU steel distributors and direct mill sales, each accounting for 5.3mt.
Christian Koehl Germany
Germany’s Klöckner increases metal product shipments 8% on year in H1 2024
Steel and metal product shipments by Germany’s Klöckner & Co. increased 8.1% year on year to 2.3 million mt in the first half of 2024, the company said Aug. 1.
Acquisitions in H2 2023, particularly of New Jersey-based Amerinox Processing, helped boost its shipments in the US and Mexico, the steel and metals processor and distributor said in second-quarter earnings.
Second-quarter metals shipments rose to 1.2 million mt, up 11.5% from the first quarter and up 3.7% year on year.
However, sales slipped 2.6% year on year to Eur3.5 billion ($3.78 billion) in the first half of 2024 due to lower prices. This contributed to EBITDA falling 37% to Eur83 million. The company expects its full year EBITDA to be Eur120 million, down from Eur180 million in 2023, saying earnings in the prior-year comparative periods benefited from a more favorable market environment.
Demand has been weaker than expected in 2024, especially in Europe, the company said. Klöckner expects the Amerinox acquisition to drive a slight increase in shipments for full-year 2024 but sees sales falling year on year due to lower steel prices.
“Despite a challenging environment, we achieved a solid result and made further progress in implementing our strategy,” CEO Guido Kerkhoff said in a statement. “With the acquisition of Amerinox Processing in North America, we further expanded our range of higher value-added products and services.”
Amerinox processes stainless steel, aluminum and special carbon steel. Klöckner said it aims to use Amerinox’s favorable location at the major port of Camden to build competitive, global supply chains. In March 2024, the company disposed of parts of its European distribution business.
Prominox buys Outokumpu’s Mexican distribution business
Stainless-steel supplier Prominox has acquired the Mexican distribution business of Finnish steelmaker Outokumpu, Kallanish learns.
The agreement includes large centres in Mexico City, Guadalajara and Monterrey formerly known as Outokumpu Mexinox Distribution (OMD).
“We are delighted to incorporate Outokumpu’s solid distribution business into Prominox being confident that by adding the strategic locations and customer base to our portfolio, we are reinforcing our position as the leading stainless-steel distributor in Mexico,” says Prominox’s president, Ivette Autrique.
In a separate note, Outokumpu confirms that the divestment of the OMD unit is due in part to dedicate more resources to the strategic areas of Mexico and the US as the warehouses serve largely smaller volumes. “We will continue to fulfil customers’ orders that are served by OMD until the transaction with Prominox is completed,” Outokumpu adds.
The acquisition is now awaiting approval from Mexican authorities and other closing conditions. The transaction should be completed during the next few weeks.
Prominox and Outokumpu did not reveal any financial details of the agreement.
Todor Kirkov Bulgaria
Heine+Beisswenger opens new logistics centre
After 15 months of construction, German steel distributor Heine+Beisswenger has started operating its new logistics centre, for which it spent €7 million ($7.7m), Kallanish learns from the company.
The warehouse is located at the company’s site in Trossingen in the Black Forest, southwestern Germany. Its main feature is a high-bay warehouse of 44 metres in length, 23m width, and 22m height, with 3,500 cartridges. The warehouse has a capacity of 15,000 tonnes, with several processing facilities, to serve customers in automotive, agriculture, mechanical engineering, and medical technology, the company notes.
Heine+Beiswenger handles long products, and is mainly active in special bar qualities, with an annual throughput of 250,000t. It is headquartered in Fellbach and operates seven more sites, most of them in southern Germany, but also in North Rhine-Westphalia and near Berlin. It plans to open a new location in northern Germany near Bremen.
Christian Koehl Germany
Cogne expands German distribution network
Cogne Edelstahl says it is expanding its distribution network in Germany, along defined chapters – North, West, South – plus a new area, East, Kallanish learns from the speciality steelmaker’s German unit.
Cogne Edelstahl operates sites in Neuss in western Germany (North Rhine-Westphalia), Rudersberg in the south (Baden-Württemberg) and Stuhr in the northern city state of Bremen. They supply customers with products made in Italy, Taiwan and Sweden.
In addition, the company is establishing in July representatives in Leipzig to serve the East chapter. It total, Cogne Edelstahl will have 37 representatives in the country.
”The nationwide expansion will facilitate the availability of bar and bright bar at locations close to customers, including processing services, cutting, and certification,” says managing director Bernd Grotenburg. He notes the company has perceived rising demand from the east in recent years, and that it plans to establish a new warehouse there.
Christian Koehl Germany
German steel product sales and stocks dip amid manufacturing slowdown
Steel product sales in the German distribution and stockholding system totaled 776,079 mt in July, down 0.7% from a year earlier, German steel stockholders’ association BDS reported Aug. 22
The July total was down 6.5% from the 829,612 mt sold in June, as the slowdown in German industrial production and weak demand weighed on the market.
Germany’s industrial output fell for a second consecutive month in June, with a drop of 1.5% on a monthly basis, worsening from the previous month’s dip of 0.1%.
Within the overall sales figures, monthly sales of long products totaled 244,917 mt, down 6.4% year on year and little changed from the prior month. Monthly sales of flat products were reported at 476,850 mt, up 3.9% on the year but down 9.1% on the month.
Weaker demand from stockists was also evident in the monthly steel inventories which fell 11.8% on the year to 2 million mt. Stocks of long products were reported at 684,005 mt, down 14.3% on the year and 2.1% lower on the month, while those of flat products were reported at 1.29 million mt, down 10.7% on the year but up 5.9% on the month.
Platts, part of S&P Global Commodity Insights, assessed domestic hot-rolled coil prices in Northern Europe at Eur635/mt ex-works Ruhr Aug. 21, down 35% since March 30.
Author: Euan Sadden
European Flat SSC Distribution have increased Shipments during 2015
In 2015, shipments of strip mill products to steel end use segments by European flat steel service centers did increase by +6 % when compared with 2014.
Comparing December 2015 with December 2014, shipments of strip mill products have been growing by +8 %, year-on-year.
On the other hand, shipments by European multi-product & proximity steel stockholding distribution noted a rather negative run in December 2015.
December 2015 shipments decreased by – 16 % when compared to December 2014.
For the total year of 2015, sales of the segment Multi-product & Proximity Distribution business registered a negative score. In 2015, shipments by this distribution segment were lower by -3 % when compared to 2014.
Commenting the developments in EU flat SSC segment, Cesare Vigano, EUROMETAL Vice-president, indicated that EU SSC shipments were supported by positive business in automotive and related industries and that in 2015 the SSC market in Southern Europe showed signs of recovery in shipments, unfortunately with economic KPI’s still on unsatisfactory level, due to permanent imbalance between offer and real consumption, calling for further progress in market consolidation process.
Mikael Nyquist, EUROMETAL Vice-president, outlined that European Multi-Product & Proximity Steel Stockholding Distribution was suffering in 2015 and that in a longer term further restructuring and consolidation will be looming in order to balance capacities also in this steel distribution segment with the perspectives of the market for multi-products & proximity steel distribution.
CONTACT : kirps@eurometal.net