In the last few months of 2021, material scarcity and high prices will remain the main features of the European stainless steel market. The imbalance between supply and demand caused by the pandemic continues to disrupt global supply chains.
Manufacturing companies around the world are still struggling with shortages of materials and parts. The most widely known effect is the reduction in automobile production due to semiconductor shortages. However, this is only one of many bottlenecks.
In Europe, the supply of stainless steel from domestic producers is still tight. Since the rapid rise in demand at the end of 2020, steel manufacturers have been unable to supply enough tonnage to service centers and distributors. Initially, this was most pronounced in the flat product category, as demand for automobiles and white steel rebounded strongly. Commodity industry.
The delivery time for 300 series stainless steel coils varies from steel plant to steel mill, but it is usually between January and April next year. This is a far cry from the 4-week shipping date many buyers were used to before Covid. The delivery time provided by regional bar mills is longer, which can be extended to May/June 2022.
Mixed use of Q4 quota
Since 2018, the European Community safeguard measures have regulated the amount of overseas materials arriving in the EU. Although more and more people are opposed to quotas and low inventories in the supply chain across Europe, the safeguard measures have been extended for another three years, covering the period from July 1, 2021 to June 30, 2024. Therefore, steel mills in many countries are still reluctant to ship to European customers. Therefore, local stainless steel buyers can hardly be relieved from the domestic shortage.
In the first few days of the October/December period, all duty-free quotas for specific product categories in several countries were cleared at European ports. These include stainless steel cold-rolled flat products from Taiwan and Turkey, as well as stainless steel bars and lightweight profiles produced in India.
On the contrary, at the current rate, the volume of these products shipped from several other countries is unlikely to be fully utilized before the end of December. Factories in some of these countries—especially those in China, South Korea, Malaysia, and Indonesia—are expected to prioritize sales to the local market rather than export.
Most cold-rolled flat products from Taiwan and Turkey, as well as stainless steel bars and lightweight profiles from India, have arrived weeks or even months in advance. These materials are stored at the docks, waiting for quota updates to avoid tariffs.
Many buyers said that the tonnage waiting for customs clearance in early October exceeded the duty-free quota. Therefore, the first-quarter quotas for these categories are likely to be exhausted quickly in early 2022.
Steel mills are still optimistic about prices
The current import volume is not important to domestic stainless steel producers. The recent fire at the Marcegaglia plant may further tighten the supply of cold rolled coil in the short term, especially in southern Europe.
Buyers confirmed that local steel mills are still optimistic about their pricing aspirations. According to reports, they are unwilling to lower the price because they have extended the order. In addition, rising energy and raw material costs are expected to put additional upward pressure on the value of stainless steel transactions in the last two months of 2021.
However, during this period, the continued slowdown in procurement activities may cause more and more customers to begin to resist further price increases. Source: MEPS