world of steel A Division of Ellias International




Home > Todays Steel News


EU steel mills play down auto issues

EU steel mills play down auto issues

 

News is brought to you by Mr. Shailesh Karia

 

Published on 11th October, 2018

 

Some European steelmakers have played down the impact of automotive disruption caused by the worldwide harmonised light vehicle test procedure (WLTP).
 

One market-leading automotive company has told its steel suppliers that it is increasing the number of cars tested substantially each week, and a European mill executive believes the situation should be normalised by November.
 

"I see a stable market when it comes to demand. [At] industrial customers, like tubers, everything is stable on a high level. The only sector which causes [us] some thought is automotive, and this is driven by the WLTP mechanism, which caused Volkswagen and others to cut back production," a steelmaking executive said.
 

German carmaker Volkswagen said it had to delay some production from this year into next as it acclimatised to the new testing regime, but no production would be lost.

 

But there has been a dip in automotive producers` steel consumption as a result of WLTP.

 

The executive said his company saw a decline in automotive shipments, but it was not as significant as the market may think. For those more dependent on shipments to a car company experiencing stronger WLTP-induced issues, the impact could be magnified.

 

"At the end of the day we had a production cut [in automotive] and a cut in steel consumption. This is what makes the market nervous … in combination with the whole situation, imports from Turkey and India", he added.

 

A seller for another large European steelmaker agreed the auto slowdown was not as bad as some participants believed. He did say the drive to reduce sales of diesel cars was also impacting sentiment somewhat in the medium term.

 

Nevertheless, the slippage was exacerbating uncertainty and causing stockists to delay their purchases in hope of clearer market direction going forward.

"The market is like a crab, it`s moving sideways," one service centre source in the UK quipped.

 

While demand from some sectors may be less stellar than anticipated, cost pressures are rising for European mills. The weaker euro is bolstering dollar-denominated raw materials, and coking coal/coke costs have been climbing strongly on the lack of any significant supply response from Australia or the US to rising demand.

 

Premiums for iron ore pellet — an important ingredient for European mills — have also been climbing on the back of China`s drive to reduce pollution and outages of major pellet and pellet feed suppliers, while the underlying fines prices that the premiums price against have also risen as China shifts away from low-grade fines. Last month a European buyer turned to the spot market for blast furnace grade pellet, and was willing to pay a premium to the 62pc fines index in the mid-$60s/t, above the $58/t premium locked into Atlantic-basin contracts for this year.

 

Prices of 62pc CSR coke out of China rose by $2.50/t to $367.50/t fob north China today, up from $321.65/t fob at the start of August. Seaborne met coke markets remain undersupplied with China prioritising domestic shipments amid environmental restrictions on its coke batteries and its mills chasing elevated profits.

 

The coke shortage is also underpinning high-grade iron ore prices, as lower-grade ore requires more coke.

 

Source : https://www.argusmedia.com//

 





     Home  |  About  |  Contact  |  Terms of Use  |  Privacy Policy
World of Steel® is a Registered Trademark in USA, China, India and EU