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70% OF COMPANIES HAVE PROBLEMS PROCURING MATERIALS SUCH AS STEEL

Date 31-08-2021 Views: 550

As reported by the Association of German Chambers of Industry and Commerce (DIHK), 49% of companies in Germany have difficulties procuring steel. The Ifo Institute even says that 70% of companies are unable to procure sufficient starting materials such as steel, plastic or aluminum. Summer hole: the press is causing confusion with headlines on the steel market. Chinese HRC and rebar stocks fall. And aluminum futures rise again by up to 1.85%.

Europe’s steel rally may be…? How confusion is created with headlines

And once again misleading headlines are racing through the so-called trade press. In the last few days we have again seen an increasing number of articles in the media reporting declining trends in steel prices in the middle of the summer and vacation season.

New EU steel market trends not credible again until September

Experience shows that activity on the European steel market declines during the summer months. This has also been the case in recent years. Only from September onwards, when school starts again in the last EU countries, can real trends be identified. But if one really wants to read a trend for 2021, it would be that even in the quietest period on the market, steel prices in the EU have shown hardly any movement and have remained at a high level.

Cui bono – who benefits from doing business with headlines?

If now, for example, authors make up a few spot prices as a possible trend, then they have not understood the market and their business. Worst of all are those who in the end quickly revise their statements and take refuge so that nothing can be blamed on them.

So here again the question remains: “Cui bono?” Who benefits from influencing the market with headlines that do not correspond to reality?

DIHK: Steel procurement difficult, 49% of German companies affected

49% of companies are having problems procuring steel products, according to recent surveys by the Association of German Chambers of Industry and Commerce.

The situation about individual raw materials is very similar for companies in Germany and at international locations.

70% of German companies have problems obtaining intermediate products

Just under half of the companies surveyed are affected by supply bottlenecks or price increases for steel, around a quarter for aluminum. In the case of copper, almost one in five German companies report a tight situation in terms of price and availability.

“70% of German companies have problems getting intermediate products,” said Clemens Fuest, president of Germany’s Ifo Institute.

Mechanical engineers and metal industry most affected

Depending on the materials required, the situation in the individual sectors varies. Mechanical engineers and companies in the metal industry most frequently cite procurement problems with steel (85 percent) and aluminum (39 percent mechanical engineering, 44 percent metal industry). The construction industry also frequently reports scarce availability and high prices for steel (72 percent), wood (46 percent) and plastics (46 percent).

Automotive industry short on steel, plastics and aluminum

In the automotive industry, plastics (46 percent) and aluminum (27 percent) are in short supply and expensive, in addition to steel (46 percent).

Shortages: Germany as a template for EU27

It is probably not presumptuous to assume similar figures for the pan-European economy. An end to demand, or rather the boom in the EU market, cannot therefore be assumed at present.

Chinese HRC and rebar stocks down, prices up

HRC inventories at China’szi warehouses and steel mills fell 65,100 mt, or 1.61%, this week, but rose 2.78% year-on-year to 3.98 million mt.

Steel mills in northern China carrying out maintenance work

Some steel mills in northern China carried out maintenance work on rolling mills this week, while several steel mills in southern China slightly boosted production. Overall, HRC production was down. At the same time, HRC prices rebounded, spot transactions improved slightly, and HRC inventories fell again.

High rebar demand expected from September

Reinforcing steel production increased slightly by 0.83% from the previous week, and apparent demand for reinforcing steel increased by 0.55% from the previous week.

Inventories decrease

Reinforcing steel inventories at Chinese steel mills and social warehouses totaled 11.24 million mt on August 26, down 115,400 mt or 1.0% from a week earlier. Compared with a year earlier, inventories were down 342,100 mt, or 3.0%.

Rebar prices pick up – peak season approaching

Rebar prices bottomed out this week, and the most heavily traded SHFE rebar saw the largest increase of over $60/mt, boosting market trading. As the peak season approaches and the pandemic has subsided in many regions, social stocks of rebar have basically fallen across the country, with the exception of the northwestern regions.

Chinese construction activity to rise but September

Chinese companies reported that they will accelerate construction activity in September, so the construction industry’s steel demand is likely to recover significantly in the next three months. Given tight supply due to production constraints, rebar inventories are expected to decline faster.

LME: Nickel, aluminum, copper up

After a brief swing into negative territory yesterday (Thursday), the LME has started positively again today. Nickel and copper are currently in the plus. For aluminum, the strong upward trend continues. On the LME, it is currently up over 1.3%, on the SHFE, the aluminum futures have closed with a plus of 1.85%.

HRC prices rise

US HRC were at around $1,936/st on Thursday. SHFE HRC futures have gained about 0.21% today.

Source: https://steelnews.biz/70-pc-companies-problems-buying-materials-like-steel/

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