Mills likely to lift CHQ rod prices for Q4 business

17th August 2021

Tight supply is expected to persist in the European cold heading steel market, in the post-holiday period. The recent escalation in regional wire rod values, including those of cold heading qualities (CHQ), came to an end in August. A weakening in activity, due to the summer vacations, contributed to the price stabilisation.

Buyers report that transactions are taking place at around €950/1000 per tonne, for 20MnB4 grade material. Opinions are divided regarding whether CHQ values are peaking, or in a temporary lull.

Supply tightness was, arguably, the catalyst behind the price rally, in the first seven months of this year. Firm demand across a range of wire-consuming sectors assisted the upward trend.

Further mill price hikes are likely to be tabled, in the fourth quarter. Robust market fundamentals should support the pricing ambitions of European wire rod producers.

An increase in purchasing activity is expected. This will put an additional strain on European steel manufacturers. They have limited capacities available, for the remainder of this year.

Mill delivery lead times are already extended, in many countries. Summer production outages, for maintenance, have further limited the availability of CHQ material. Shortages of certain grades and dimensions are noted.

The supply situation has been exacerbated by recent events. Extensive flooding in the wire-producing areas of Germany and Belgium curtailed operations, at many sites. Transport routes, for road and rail, were also damaged, in both countries. Mill despatches are delayed, as a result.

It is reported that a major steel manufacturer, in the Czech Republic, has a significant production backlog. Furthermore, Liberty Steel has curbed wire production, at its UK plants, due to ongoing financial problems.

European CHQ mills have little scope to take on new customers, outside their current contractual obligations. Most producers are now quoting delivery dates for supplies at the end of the first quarter of 2022.

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