Demand recovery - steel suppliers' holiday wish

During the holiday season, children around the world look forward to gifts. Similarly, steel suppliers are looking forward to a recovery in demand and prices.

The traditional gifting season in Western Europe runs from St. Nicholas Day in early December to January. Current signs suggest that steel distributors will have to wait even longer for a sustained recovery in demand, possibly after the Chinese New Year at the end of January.

There are indications that the market bottom, at least for hot rolled coils, has already been reached. In Italy, the lowest offers were canceled and an increase was announced. They have not yet entered into force. In some cases, stock material is still available at below factory prices.

Significant reductions in nominal production capacity have been made over the past few months. Metallurgists are considering an early closure in December and an extension of maintenance. Availability in January for some products is already decreasing.

Contracts for the supply of cars for 2023 are still far from any agreement, and negotiations are ongoing. Buyers are looking to bridge the gap between this year's contract deals and current spot market prices. Manufacturers, on the other hand, cannot afford to set too low benchmarks for such a key business.

Long delivery times and minimal price advantage reduce the attractiveness of imports. The threat of anti-dumping action against Japanese-made steel is discouraging orders. However, the Indian government's decision to abolish the export tax has led to heavy buying by European service centers and traders over the past month. Reports indicate that the country's quotas for the first quarter will be exceeded.

Market sentiment may not be much more positive, but certainly less negative. Caution is the watchword as buyers are reluctant to take on large volumes in case prices fall again. It only takes a small push to meet the wishes of distributors and stimulate demand.