Tension eases in northwest European coil market

Following months of chasing and securing material at any cost, players in the northwest European coil market are seeing the pressure relax somewhat, although this does not mean a turn in price trend.

“The panic purchasing of recent months has waned,” one Ruhr-based stockholder tells Kallanish. “Consumers are much more relaxed now, and more cautious with placing orders. I just talked to a mill on that matter, and they see it like that, too.”

One crucial factor, he points out, is the slowdown of production at carmakers, due to the shortage of semiconductors. German automotive association VDA, in its monthly update, noted that OEMs are by no means utilised to the level they would wish to be. “BMW is reducing production, Mercedes too, and I heard of Volkswagen in Mexico,” the stockholder says. “This means lower steel consumption, which the market will feel.”

Other players share the impression that the “hype” is abating, but are not so sure if the movement of prices is coming to a stop. A buyer in southern Germany notes that spot volumes for the third quarter are becoming increasingly available from southern and Eastern Europe. This, however, does not apply to the northwest EU mills and their lead times stretching way into the fourth quarter, another buyer from central Germany notes.

Both agree that the latest price target announcement from ArcelorMittal – €1,170/tonne ($1,304) for hot rolled coil and €1,300 for cold-rolled and galvanized – remains the mark of orientation for domestic mills. The latter buyer does not rule out that prices could still inch up further, but much more modestly now.

Against that, the Ruhr-based manager says he and his customers are not making any more plans that are based on the assumption that mills’ prices are still rising. Also, he sees transaction prices in his region for HRC at the friendlier level of €1,120-1,140/t.

Christian Koehl Germany