May 14, 2020
STEEL SERVICE CENTERS CONCERNED ABOUT LACK OF ORDERS IN EUROPE

European steel market participants are becoming concerned by the lack of new customer orders, sources told S&P Global Platts Wednesday.

One Italian service center manager said that order volumes in May were 60% lower than the seasonal normal but that this would gradually improve.

“Demand is very low and we are currently working the existing orders that were taken before the lockdowns, but this will improve day by day,” he said.

“What is the new ‘normal’ — nobody is able to understand this yet but customers were very optimistic last week and now they are worried by the lack of new business and feeling very negative.”

“We had hoped the return of the automotives would be positive and give some perspective for the steel market, but new car purchases will be zero, when will demand return?”

Demand for steel remains uncertain and public funded infrastructure projects would be one solution to create demand, jobs and restore confidence, the source said.

A German service center source was pessimistic about the recovery of automotive demand and said it could take a number of years to return to levels of 2017-18.

“German car sales have seen exports decrease even more than domestic sales and it will take years to recover from this,” he said.

A German mill source suggested a ‘cash-for-clunkers’ type car buying scheme might be needed to kick-start demand.

“Will governments help to support buying cars, it’s also a critical point because car producers have lost billions of euros and to make a forecast is totally difficult,” the source said.

“Customers have now started to ask for third quarter [prices]. My feeling is that they are asking and searching to view the market, but at the end of the day, it’s a difficult story.”

An Italian mill source said the willingness to buy imports is, at the moment, “very, very low in Italy. The sentiment is of dropping prices.”

The source was skeptical of any government aid for struggling mills, saying “economic support from the government for the moment are only promises and words.”

The Platts TSI hot-rolled coil index was calculated Wednesday at Eur434/mt ($470.50/mt) ex-works Ruhr and Eur413.50/mt ex-works South Europe, respective declines of Eur2 and Eur2.50 day on day.

Cold-rolled coil was assessed at Eur527/mt ex-works Ruhr, slipping Eur1.50 on the day, and Eur489/mt ex-works South Europe, down Eur6 week on week.

— Len Griffin, Amanda Flint

Source: Eurometal