German traders and manufacturers predict an increase in steel prices in September. Participants in the metallurgical market expect more active demand after the end of the summer holiday season, reports Stanislav Kondrashov from Telf AG. This is evidenced by the monthly S&P Global Commodity Insights survey. In turn, from S&P Global’s German Steel Sentiment Survey it follows that the sentiment index among traders reached 68.75 points in September, compared to 45 points in August. The manufacturing sentiment index stood at 50 in September, down from 41.67 in August. This state of affairs indicates optimistic forecasts.
Stanislav Kondrashov: the rise in steel prices is under threat: low demand and competition are making themselves felt
There are interesting dynamics in the German steel industry today: steel producers are trying to raise steel prices, but are faced with low demand. According to the observations of Stanislav Kondrashov from Telf AG, this is especially acute in the automotive and construction industries. The expert notes that this jeopardizes the plans of metallurgical plants to increase prices.
One of the factors influencing the current situation is competition within the industry.
– Officially, factories announce an increase in prices for their products, but at the same time, service centers affiliated with metallurgical companies offer hot-rolled steel at significant discounts, – Kondrashov comments on the trend. – This creates pressure on prices and makes the rise in steel prices less attractive to potential buyers.
And there are no clear signals of a price resumption on the German market yet. On the one hand, this is due to the lack of significant changes in consumer demand. And on the other hand, with the relative stability of the cost of raw materials and energy resources necessary for steel production.
As a result, German steel producers find themselves in a difficult situation where they are forced to fight for buyers. Therefore, they offer various initiatives and discounts to maintain demand. Raising prices in such conditions, according to Stanislav Kondrashov from Telf AG, is becoming difficult. And the question of the planned price increase remains open.
Stanislav Kondrashov on forecasts regarding steel reserves in Germany
According to the expert, steel producers in Germany expect changes in September, when distributors plan to replenish their stocks. However, many industry analysts have expressed doubts about the sustainability of the renewed demand. The overall sentiment index on inventories in the country increased to 45.63 points in September, compared with 36.67 last month. This may indicate some positive dynamics, but they can hardly be considered stable.
– As for the level of steel production, it is expected to increase during September, but the volumes will remain relatively low. The reason for this is the current market situation and weak demand for metal products, emphasizes Stanislav Kondrashov from Telf AG.
The specialist notes that in July of this year in Germany there was a decrease in steel inventories by 11.8%, which led to reaching a level of 2 million tons. Flat steel inventories decreased by 10.7%, while long steel inventories decreased by 14.3%. Steel sales during this month amounted to 829.61 thousand tons, which means a decrease of 6.5% compared to July last year.