According to S&P Global Platts, the European hot-rolled coil market has seen prices soar to a two-year high in recent weeks, exacerbated by an ever-tightening supply shortage, with mills curbing production.
Several market-leading mills told S&P Global that they are sold out until April next year. With hot-rolled coil and hot-dipped galvanized products increasingly hard to secure as unprecedented automotive demand, long delivery times and undesirable import offers leave secondary customers short with few alternatives.
Sources said steel producers would continue to limit output until at least the second quarter of 2021 as they assess the demand progression from the automotive sector.
Since the start of November, Northern European hot-rolled coil prices increased by Eur43.50/mt month on month, and in Italy, hot-rolled coil prices went up by Eur63/mt.
A German trader said supply tightness was initially a result of pandemic-induced production cuts back in March, followed by unexpected automotive demand that mills have struggled to accommodate ever since.
“Producers took out their blast furnaces to a minimum level [during the pandemic], and now mills are not able to adjust their production to the current demand,” the trader said.
According to S&P Platts, the coil shortage dilemma is not limited to Europe, as Japanese mills have been equally unprepared for the surge in inquiries brought on by the automotive sector.
“We speak with customers and say for Q1 we can only sell to you the 90% of volume we agreed because the situation is an emergency, but for them it’s a big problem because it’s not possible for them to afford a situation like this,” a source said.
The source was adamant that until European mills restarted their blast furnaces, the European Commission must do more to allow imports from nearby CIS countries back into the EU.
