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%.
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.
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.
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?
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.
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.
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).
In the automotive industry, plastics (46 percent) and aluminum (27 percent) are in short supply and expensive, in addition to steel (46 percent).
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.
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.
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.
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.
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 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 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.
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%.
US HRC were at around $1,936/st on Thursday. SHFE HRC futures have gained about 0.21% today.