Fewer northwest European marketparticipants than last month believe the massive surge
in coil prices willresult in a correction. Many expect prices to consolidate or rise further,
possibly until the end of the year.
“I am convinced the price rise will last to the end of the year and most probably into the next
year,”says a mill manager. He cites receding imports, high iron ore and scrap prices,and idled
capacities. This feeds the argument of stretching lead times, whichis often heard from the market.
The market leader mill “…claimed theywere basically sold out for the year with
their regular customers,” Kallanishhears from a Belgian buyer.“There are no possibilities
for extraquantity or new business, they said.” This stance has been taken by anothernorthern
steelmaker as well.
A Dutch service centre manager agrees.“Theproducers of coil material claim to have well
-filled order books with longdelivery times; some even talk about December delivery,” he
says. “Basedon all these aspects, we believe that a further price increase in the comingperiod
cannot be ruled out.”
A German consultant agrees inprinciple that prices will rise in the short term, but is sceptical
aboutdevelopment later this year, especially as idled capacity is being brought backon stream.
Both he and the Dutch manager point out that this may tip thecurrent balance in favour of
more material becoming available on the market.
The mill manager however claims thatproducers will remain cautious with ramping
up production given the currentcost structure. Mills sees the hot rolled coil breakeven price
at €500/tonne($591) ex-works, a good €100 above the summer low. Mills are heard asking
forthat successfully in some deals already, although the range can still beanywhere from
€450 upwards, depending on the individual relationship.