Posted on 21 Apr 2021
Buyers of coil products are considered pretty much defenceless against the ongoing surge in prices, but signs are growing that they may just stop buying at some point.
For hot-dip galvanized coil, especially, which is now being quoted by the market leader at above €1,100/t ($1,325) ex-works, the issue availability trumps pricing.
According to one German distributor of galvanized sheet, “the third quarter is reportedly so overbooked already that even the fourth is considered sold out, except for smaller orders. It looks like we may as well stay home in the second half-year”.
Until now, demand has remained high and so has buyers’ willingness to pay high prices, he tells Kallanish. But going forward, he says “it is 90% likely that orders will come down in the second half”. Fabricators downstream will soon become reluctant to stay in the game, will reduce their production, and stop ordering steel. “Currently, there are still orders being worked off; but they are not profitable anymore, and soon people might just stop doing business,” the distributor believes.
A similar warning comes from the Benelux, where “shortage of material, extremely long delivery times and the insanely high prices could force large consumers to reduce or even temporarily stop production”, a manager says.
He criticises EU policymakers for even considering an extension of import duties in this situation where consumers face price increases of up to 50-75%. “If steel consumers were to decide en masse to reduce their production, this could lead to considerable redundancies, which cannot be the intention of European economic policy,” he says.
Source:Kallanish
