Flat product prices are likely to stabilise in Europe until mid-next year, while the US market remains uncertain, Gisbert Rühl, CEO at German distributor and service centre Klöckner & Co. told Platts in a conference call on Thursday. Rühl suggested, however, that price decreases in the US have, nevertheless, hit rock bottom already.
“We are not pessimistic about next year. It is hard to forecast, but we basically expect a stable development in Europe,” said Rühl, adding that the US market will be dependent on an upswing from the industrial sector and a price recovery in oil and gas in particular.
Klöckner expects this year’s positive trend to continue in Q4, though with seasonally lower sales. “Q4 is typically the weakest quarter,” said Rühl. The distributor anticipates an operating income of between €180 million and €190 million, significantly above the previous year’s figure of €86 million, as well as a positive net income.
Despite the favourable forecast, the steel distributor remains bearish. “Pressure in the steel market will continue,” said Rühl. “Overcapacities will remain, but anti-dumping duties will help,” he added.
Current demand and the future outlook of Klöckner’s main markets – the US and Europe vary significantly. While consumer-based demand is solid in the US, demand from the heavy equipment and oil and gas sectors is expected to remain weak this year and they are likely to show no short-term uptick, affecting the heavy plate business in particular.
“It is surprising that the US market has been so disappointing. The development of secondary effects was worse than expected,” Rühl said.
In the US, positive noises are coming from the construction industry and automotive demand is likely to remain steady, while in contrast the manufacturing, energy and shipbuilding sectors are lacking an uptick.
Klöckner’s view on Europe looks brighter by comparison; apart from the energy industry, all sectors are seeing positive developments, while Germany’s shipbuilding industry is particularly strong. Real steel demand is estimated to increase in Europe by 2% until the end of the year, whereas US demand is forecast to dip by 3%. The European market accounts for 61% of Klöckner’s sales, the US for 38%.
Laura Varriale, PLATTS
