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German mills bullish on steel prices, buyers' sentiment toward stable: Platts survey

Highlights

Price sentiment dampened since May

Inventories started to rise again

Production expected up

German steel producers are expecting a slight rise in steel prices over the coming weeks, while traders and end-buyers expect a stable pricing environment amid concerns over automotive demand and high volumes of imported material, according to Platts' monthly German steel sentiment survey.

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The survey, conducted at end of August and the beginning of September, showed the overall expectation for steel prices at 56, with producers the most bullish at 67. Traders and distributors as well as end-buyers expect a stable development at 50 (50 denotes stability).

The sentiment for steel price development turned gradually from extremely bullish at 96 in May to a more stable expectation over the summer as the summer slowdown took hold of the market. Over the last two weeks, however, market sources told S&P Global Platts that the takeing of volumes at steel mills by the automotive industry would be less certain amid the semiconductor shortage that forces carmakers to have intermittent production.

Market participants are now mostly back from the holidays and one European mill was heard starting to offer hot-dipped galvanized coil for October – which was one of the most sought-after products during this year's material shortage. The mill was previously officially booked until year-end.

Sources said that the material will be helping to clear backlogs and opinions were mixed on whether the volumes that are appearing now on the spot market were big enough to have an effect on spot pricing.

Steel price weakening over summer term

Prices for flat steel have overall decreased over the past months. The daily Platts hot-rolled coil assessment stood at Eur1120/mt EXW Ruhr on Sept 3, down Eur65/mt from its peak June 25 at Eur1190/mt EXW Ruhr, a record high.

European rebar prices have recently shown some weakness as well, though less pronounced. The weekly Platts rebar assessment started to drop on summer lull and lower scrap prices in August to Eur835/mt EXW Northwest Europe on Sept. 1, but sources say fundamentals remain good.

The increase in import material being offered and arriving in Europe over the recent months has led to more pricing pressure on domestic mills, though mills have not been changing pricing officially. Producers are currently in long-term contract negotiations and sources said mills would want to keep spot prices up.

Ahead of the holidays, buyers booked volumes when the opportunity arose amid rapid steel price rises and tight material availability. This has led to an increase in stock levels, which is also reflected in the latest figures from German steel stockholder's association BDS.

According to the latest BDS data, flat steel stocks increased 8.5% from June to 1.2 million mt in July, stock levels for long steel products grew 2.6% on the month to 791,193 mt.

For September, market participants expect stocks to slightly grow with the survey index at 57, the index for production expectation stood at 74, indicating a pick-up in steel production from the summer.