In the survey of German producers, distributors/traders and end-buyers conducted at the beginning of February, the index for steel price development stood at 65, indicating a slight expansion (an index of 50 indicates stability), but down significantly from December and January, when the index stood at 91.
A European service center source said prices would remain stable as long as the supply shortage persists, demand stays buoyant and imports stay within their home markets.
“Despite the pandemic, industrial demand is good. End-user stocks are low, and they need material daily – this won’t allow prices to soften,” the source said. “There are mills from other countries that are interested in selling in the EU but are hindered by duties and transport [difficulties]. Mills know they can keep prices high and understand that buyers don’t have many alternatives to buy from.”
Most bullish among the groups were producers at an index of 88, whereas distributors and traders were at 56, and end-buyers at 50.
ArcelorMittal’s recent price increase for flat steel failed to pull the market higher and sources said the move had instead kept prices at their current levels, which in a historical comparison for hot-rolled coil, represent a 13-year high, according to the Platts daily HRC assessments for Northern Europe and Southern Europe.
“Asia is weakening and import offers are becoming more abundant,” a European mill source said. “ArcelorMittal’s lead time is the same as the Asian one now, so they have no advantage to offer. It is a purely defensive increase.”
German stock levels are currently at a 33-year low and the survey showed participants expect levels to decline further, with the index at 34. Producers and distributors/traders were the most bearish, at 25 and 28 respectively. End-buyers expected stable stocks at 50.
A source at a Benelux-based service center said he did not see an increase in inventories given that stockholders were stretched, with mills unable to guarantee quick delivery times.
“Inventories are starting to decrease — it’s better than a few weeks ago but not enough. More capacity will be coming back this month, and that’s one of the reasons we see pricing stability,” the source said. “There is the sentiment that capacity will return.”
With more capacity coming back on the market in the first quarter, the index for production stood at 67, indicating a slight increase. Producers were at 75, again the most bullish on production levels. The distribution and trading sector expects a positive development at 68, while end-buyers expect stable production at 50.