London — Sentiment across the German steel market remains bullish, with prices and production expected to increase further in the coming weeks, according to the monthly German steel sentiment survey by S&P Global Platts.
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In the survey of German producers, distributors, traders and end-customers, conducted at the beginning of this month, the index for steel price development was at 75, similar to September's survey at 77, indicating moderate expectations of an increase (an index of 50 indicates stability). In contrast to September's survey in which distributors/traders were the most bullish at 81, expecting sharp rises, distributors rowed back in October to 75 -- in line with end-buyers and producers.
September's survey: German steel market prices expected to rise
Flat steel prices rising more than long products
Price rises are mainly being driven by flat steel products, which have been on an uptrend since the late summer. The daily Platts TSI index for hot rolled coil on an ex-works Ruhr basis rose by almost Eur50 over the course of September to Eur499/mt on Oct. 8, while European rebar prices on an ex-works Northwest Europe basis went up only slightly by a little over Eur5 to Eur475.50/mt on Oct. 2, according to the weekly Platts TSI index.
As German producers are set to continue ramping up, steel output is expected to continue to grow, with the index including all market participants at 68, slightly lower than the previous month's 71. End-buyers were the most bullish at 75, with producers and distributors at 67 and 63 respectively.
Distributors expect stable stocks
Inventories are expected to be largely stable, with a slight upward bias, with the index at 56 suggesting that purchasing is ticking up from the recent pause by the distribution sector. There are, however, mixed expectations among producers, distributors/traders and end-buyers. There was a noticeable change in end-buyers' expectations. September's index suggested a moderate decrease in stocks which swung to an increase in October, while producers' expectations changed to 42 from 31.
The index for distributors was at 50 this month, indicating stabilization, slightly down from 56 in September. The German market will enter the annual year-end destocking phase in the short term, which means they would normally not seek to have high stocks late in the fourth quarter.
Sources told Platts that the distribution sector is holding off purchases for as long as they can, while end-buyers were those mainly stocking up in the past weeks. Mills are set to remain firm on offer prices, having no availability for most flat steel products until next year.