ThyssenKrupp delivery problems tighten EU coil market

ThyssenKrupp’s European steel division has been hit by a “perfect storm” of events, which have left it struggling to meet orders and seen its offer prices stretch out beyond its competitors’, according to market sources.

Buyers have for months noted the German steelmaker was struggling to meet delivery commitments having suffered two fires which, sources have estimated, cost around 300,000 metric tons of production. A trader said one German service center had delays of six weeks for material due in week 41-42.

A relining of blast furnace B at TK’s affiliate Hüttenwerke Krupp Mannesmann (a 100 day reline that began in September) limited production at a time when the imminent reopening of the Sagunto galvanizing line near Valencia meant hot rolled coil would have to be redirected to act as feedstock for the Spanish mill.

The recommissioning of the 3.5 million mt/y galvanizing line was expected to help alleviate the tightness in the hot-dip galvanized coil market, but sources said the line’s capacity was instantly allocated to the thirsty automotive sector. “We approached ThyssenKrupp on the mill they reopened in Spain but they said all that galv is destined for auto,” a trader said.

A source at the German producer confirmed this, noting the reduction in import options for end-users. “Our galv line sold out instantly. The automotive companies need to buy more from the western Europeans. They all target to buy 10-15% from further afield but now they can’t,” he said, in particular noting anti-dumping tariffs for Russian cold rolled coil.

A number of market sources said ThyssenKrupp was also struggling from having oversold more generally in light of the increased need for domestic supply. Buyers quoted hot rolled coil offer levels from ThyssenKrupp as high as €595/mt ex-works, well in excess of the other major European producers.

“I hear that everybody is more or less at the €550/mt level: there’s one rumour that ThyssenKrupp sold too much around the time of EuroBlech (late October) when no-one was seeing these dramatic increases in coking coal costs, so they try now with remaining volume to make up for this. I can confirm that they’re at a higher price,” a source from another mill said.

While the ThyssenKrupp insider said the mill’s main problems were behind it, domestic supply in the European coil market remains acute with import options increasingly scarce, fuelling confidence that spot prices will increase further. However, fundamental demand remains flat leading service center and stockholder sources to question the sustainability of prices.

A ThyssenKrupp Steel Europe spokesperson confirmed a series of technical problems have disrupted deliveries, but said delivery delays are being managed. The company said it is currently investigating the restart of the Galmed galvanizing line in Spain but did not confirm it has reopened.

The spokesperson declined specific comment on pricing, but said: “In general, we still see big insecurities on the market that particularly result from the currently volatile raw material markets.”

Peter Brennan and Laura Varriale