German steel price sentiment remained bullish in January, according to S&P Global Platts’ monthly steel sentiment survey, with all participants expecting an increase in both steel and raw material costs, and most respondents are optimistic about increasing production capacity in the near future. -term.
Sources say production will pick up as new blast furnaces are expected to restart in the first quarter of 2021, although maintenance problems at some European plants could lead to potential delays.
In a survey of German manufacturers, distributors and traders conducted in early January, the steel price dynamics index stood at 91, as did the December survey, indicating expectations of significant growth (index 50 indicates stability).
Traders and manufacturers were bullish during December at 85 and 97. This was in line with November data, with traders at 87.50 and manufacturers down slightly at 85. All market participants were polling for expected sustained gains over the next few weeks.
Sources say the rise in prices was fueled by a shortage of steel in the market and the mills were sold out in the first quarter. Buyers are currently awaiting offers for early April, and orders in the second quarter are expected to ship in June-July.
Hot rolled coils and hot dipped galvanized products were extremely difficult to buy due to significant demand for cars, long delivery times and expensive import offers, leaving few points for buyers to buy.
Since the beginning of December, hot rolled coil prices in Northern Europe have increased by 21% compared to the previous month, while in Italy hot rolled coil prices have increased by 25%.
Inventory expectations were slightly higher in January, with respondents citing mostly a slight decrease in available inventories at 43 versus December’s overall index of 20. Traders and manufacturers were expecting smaller declines of 40 and 46, respectively, indicating the durability of current steel capacity. … questions.
A source at the European service center said inventories will be slightly higher than in December.
“The important thing is that we have many orders for the future. We are scared because we ordered so many in November-December, so we will receive a lot of material in the second quarter. ”
A source at the German mill said that only a halt in the economy – similar to the pandemic at the beginning of last year – would stop the rise in prices. The economy shutdown is currently under political discussion as Germany struggles to contain COVID-19 cases.
Increase in production capacity is expected in the first quarter.
Several market sources said blast furnaces at the plants in Ghent, Bremen and Dunkerk have already returned to full capacity this month. According to the study, output in January was higher at 68, compared to December 53.
Producers were the most bullish at 75 on a future increase in production, while the trade /distribution sector pointed to a rise of 60.
A source from the Benelux countries said there will be more imports to the EU in the first quarter, as well as additional capacity, suggesting “a better balance between supply and consumer demand.”
The metal processing industry has struggled with capacity shortages as recyclers wait for materials from factories to be processed and delivered to end users. According to the German Steel Association WSM, the industry has expanded from flat products to long products.