Northwest Europe coil supply delays could worsen

Northwest European coil lead times remain long and reliability of receiving material on schedule questionable. This will probably be the case all through the second half-year, regional sources say.

Deliveries could become even tighter now that one German mill has informed customers about delays into the fourth quarter, after a lightning strike caused a power outage in June. A spokesman notes the incident has not caused production shortages, as some market rumours had it, but rather delays which the company is trying to catch up on.

He does not give details of tonnages, while some market participants were heard saying that deliveries from that works could be 30% lower in Q4. “I cannot quite understand why the mill is not clearer about what’s happening,” one German buyer tells Kallanish. “Disruptions, after all, are most normal, and I’ve seen many in 40 years.”

He adds that “as a rule, they lead to price increases”. Although he has not heard of reported new offers for hot rolled coil reaching €1,250/t ($1,478) from domestic mills, he says they are becoming more likely under this scenario.

Other elements adding to the scenario of scarcity are the repair works currently being undertaken by thyssenkrupp on blast furnace Schwelgern 1, and some production problems heard in the Benelux.

According to a Dutch observer, one plant is still experiencing production problems after a repair carried out earlier this year. For now, it is confined to low-grade qualities in certain thicknesses, he says. He also tells of technical problems with production at another plant, which is notably prioritising orders from the automotive and transport sectors, which have turned out higher than expected.

Christian Koehl Germany