German steel sentiment improved on further price increases expected in the coming weeks, while production is expected to rise, albeit at a slower pace, according to the monthly German steel sentiment survey conducted by S&P Global Platts.
In a survey of German manufacturers, distributors, traders and end users conducted earlier this month, the steel price dynamics index stood at 77, indicating rather strong growth expectations (index 50 indicates stability).
The distribution sector was the most optimistic: the price dynamics index in this group was 81, while the producers and final customers were at 75.
Platts TSI Indices for Hot Rolled Coil and Rebar have risen by about € 70 per tonne ($ 82 per tonne) and € 20 per tonne, respectively, in the past three months, as industrial activity lifted from the peak of the first wave of the pandemic.
Participants expected an increase in steel production, with an index including all groups at 71. Notably, producers and distributors were the most bearish at 69, and end-users at 75.
“It is not possible to quickly increase volumes. It will take several months, ”said a source at a plant in Germany, adding that this was the case for steel production in blast furnaces.
Data from the German steel association WV Stahl showed crude steel production fell sharply for the fourth straight month in July to levels reached during the financial crisis, down 25% from last year to 2.4 million tonnes.
However, the mills said they plan to gradually ramp up production in late summer /early fall in line with demand.
The stock development index at 38 of the estimated stock levels will fall, while the distribution sector itself nevertheless offers a largely stable level at 56. However, producers and end customers expect a decline as the index was calculated at 31 and 25 respectively.
As material tightness remains unchanged amid declining production at the mills, sources say it will be difficult to stockpile, especially roll-to-roll products, whose lead times stretch to the end of the fourth quarter or even the first quarter of 2021.