Limited Trading Activity Forced the European Galvanized Plain Sheet Prices to Plunge
- 30-Sep-2022 2:52 PM
- Journalist: Francis Stokes
This week, the Galvanized Plain Sheet prices witnessed minimal trading activity in the European market due to a lackluster demand outlook. According to market participants, limited trading activity in the Galvanized Plain Sheet market is observed in the week ending September 30, 2022, due to higher stockpiles and reduced demand from terminal consumers. According to manufacturers, panic buying activity due to the Russian attack on Ukraine has prompted distributors with high inventory levels. The stock reduction has been slowed due to low demand from major end-users such as the automotive and white goods industries.
As per our sources, Northern Europe's Galvanized Plain Sheet prices are down by more than USD 19/MT compared to the previous week and settled at USD 850/MT towards the end of this week. Due to high production costs, European steelmakers have also shown little interest in commodity grade Galvanized Plain Sheet sales. According to several mills and traders, Galvanized Plain Sheet's current prices are below the production costs.
As per manufacturers, the estimated price gap between current prices and production cost is more than USD 100/MT. According to European manufacturers, the price of Galvanized Plain Sheet should be at least USD 1,000/MT ex-works to cover expenses.
According to market participants, the main reason for the high-cost increment is rising energy prices in Europe. Higher costs have had a limited impact on the price of hot-rolled coil, which is used as feedstock for cold-rolled coil and Galvanized plain sheets. However, the situation has been different for flat downstream products. Mills desperately need additional orders and will reduce discounts for special deals. As per market participants, no particular price targets can not be set on Galvanized Plain Sheet as market sentiments can be governed by factors such as energy costs and varying demand over time. Thus, they do not expect a healthy rebound like other flat-rolled materials.
On the other hand, distributors were pessimistic, reporting ongoing cancellations from the automotive sector, instilling a mixed and case-by-case outlook. The automotive industry sent mixed signals, with order intake reported as low but increasing. Given the long automotive backlog, expectations for orders to be maintained in the coming weeks were cautiously optimistic. As a result, ChemAnalyst anticipates that Galvanized Plain Sheet prices will continue to rise in the coming weeks amidst the substantial rise in downstream demand.