May 15, 2020
FORECASTING CUSTOMER DEMAND A CHALLENGE FOR STEEL COIL SUPPLIERS
2020-05-18
Forecasting steel coil demand remains a challenge with customer sentiment shifting from day-to-day, a Benelux-based steel service center source told S&P Global Platts.
“It is very difficult to make any budget forecasts as some customers are positive and others negative but then they shift opinion every few days, so it is very hard to forecast the demand side,” the source said. “For April we forecast worst case a decline of 25% from the seasonal normal but we managed better than that at minus12% which was helped by being less exposed to the automotive sector.
“We are now concerned about a dip in the construction market in the summer as social distancing doesn’t really work in that sector and also consumer buying power has been damaged, so who will buy new properties?”
The source said that he expected further declines in price as under-booked domestic mills would need to cut prices to compete with aggressive import prices. Import offers were heard at Eur375-390/mt for HRC and at Eur465/mt for CRC, both basis CIF Antwerp.
A Benelux-based trader said there would be more uncertainty surrounding imports given the ongoing anti-dumping investigation against Turkish hot rolled material, with buyers cautious as greater protectionist measures remain imminent in the market.
The source said it would take time for demand to pick up again, with several Italian mills continuously producing throughout the lockdown period, and consumption at low levels.
“Our customers have not been closing many deals, but in two weeks we will reassess our stocks and consider purchasing again,” he said. “People are looking for July/August deliveries.
“When we are seeing prices in China go up and raw materials still relatively high, I don’t see prices going down any further,” the trader added. “I see no consolidation, we are at the bottom of prices today. Mills have to continue to adapt their production to the demand and slowly we’ll recover by September.”
The same source reported Northern European mills were looking to sell material into North Africa, although they remained less competitive than Far East and CIS producers.
A Central European service center source said steel coil inventories were quite high, with customers stopping orders and wanting to negotiate quantities and prices.
“They want to get more time – they are looking to shift quantities from the second quarter to the third,” he said. “We’re hearing there are some larger volumes on the table for this time, so mills are competing against each other.”
The Platts TSI hot-rolled coil index was calculated Thursday at Eur431/mt ($465.56/mt) ex-works Ruhr, a decline of Eur3 day on day.
In Southern Europe, HRC gained 50 euro cent on the day and was assessed at Eur414/mt ex-works South Europe.
Since the start of the coronavirus lockdown in Europe, marked by Italy on March 9, European regional hot-rolled coil prices basis ex-works are now Eur51.50/mt and Eur41.50/mt lower, respective declines of 10.7% and 9.1%.
Cold-rolled coil was assessed at Eur522.50/mt ex-works Ruhr, losing Eur4.50 from Wednesday and a decline of Eur34/mt, or 6.1%, since March 9.
— Len Griffin, Amanda Flint
Source: Eurometal
