Cold heading steel market stabilises in Europe

Extended mill delivery lead times continue to support European cold heading quality (CHQ) rod prices. This is despite a recent reduction in raw material expenditure, notably for iron ore and ferrous scrap.

MEPS understands that most transactions, for 20MnB4 grade material, are taking place at €950/1000 per tonne – unchanged from the figures registered in August.

Supply in most European countries is tight. Many customers report that they remain on allocated volumes. Away from contractual obligations, spot availability is scarce.

Nevertheless, European delivery lead times appear to be stabilising. German CHQ producers are quoting slightly longer despatch dates, relative to their European counterparts. This is due to the supply disruption that developed following recent flooding.

European market participants report that the significant decline in auto-related activity is resulting in improved availability, for most wire rod products, including those of cold heading qualities.

The recent lull in purchasing activity, during the summer vacation period, has also played its part. Moreover, activity levels across a range of wire-using industries were slow to pick up, in early/mid-September.

A number of European buyers remark that they prefer to procure CHQ rod from local suppliers, rather than from outside the continent. The delivery of non-EU material is becoming increasingly problematic. This is due to a spike in freight costs, for both container and bulk shipments, as well as logistical difficulties at several Asian ports.

The pricing aspirations of European CHQ mills may be boosted by the continued strength in global markets, particularly in Asia and North America.

Demand for cold heading material, in both China and Taiwan, remains strong. Fastener companies, in both countries, report healthy sales to their international customers.

Leading Taiwanese CHQ producer, China Steel Corporation, announced a modest list price rise, for fourth quarter deliveries, across its rod products. A planned outage for mill plant repairs is expected to tighten supply, later in the year. CSC is, reportedly, planning to cut its rod and bar output, by at least 10 percent, in the October/December period, compared with the tonnage produced in the third quarter.

In North America, steel manufacturers are expected to target substantial price increases in their upcoming 2022 contract negotiations. The rapid rise in wire rod basis values, throughout 2021, will give CHQ producers the opportunity to push for sizeable hikes, in their annual discussions. However, a recent fall in automotive activity, owing to the shortage of semiconductors, may slightly undermine the full extent of their pricing ambitions.