Fears of steel shortages in the downstream metals industry are rife. Since the fall of 2020 we have been reporting that there are serious shortages of steel and stainless steel in Europe. The United States is also repeatedly reporting that there is a shortage of material there.
Steel shortage problem already known since fall 2020
Back in December 2020, we published an article on this steel shortage subject and took a closer look at the situation (Source). And the current result of our renewed examination leaves one sobered. Because the most important question has remained and it is becoming more urgent: “Where can I still get stainless steel (steel) sheets and coils?”
But how could this steel shortage come about?
In April 2020, there was a demand from European steel producers and Eurofer that import quotas for steel and stainless steel to Europe should be reduced by 75%. (Source) The European steel sector would need additional protection due to the Corona crisis.
Fortunately, this demand was rejected by the EU. Otherwise we would now be facing an even more extreme, if not disastrous, steel shortage situation for the entire European economy.
Steel production not back to pre-crisis level until early 2022?
At the beginning of December, spglobal.com reported that steel supplies would be tight at least in the first half of 2021. It was also assumed then that steel production would not return to pre-pandemic levels until early 2022. (Source)
Steel stocks in Germany at 33-year low
In December 2020, steel inventories at German distributors and service centers fell to a 33-year low. Even then, it became apparent that manufacturers would not be able to meet demand in the awakening market. (Source)
As early as late December 2020, delivery times at April or May for EU steel
At the end of 2020, metalbulletin.com reported that steel prices in Europe would pick up. Due to ongoing domestic shortages of steel and stainless steel. At that time, producers were already sold out through April and May 2021. (Source)
Shortage not only of coils but also of other product categories.
Supply and demand are completely out of balance. France and the BENELUX countries report that they were used to supply always being greater than demand. And that the situation has completely turned around. (Source)
Situation aggravated by new anti-dumping measures
At the beginning of 2021, the EU’s provisional anti-dumping measures against Turkey also came into force (Source). Which had been brought only in May 2020 by the Eurofer on the way (Source). Primarily HRC (hot-rolled coil) from Turkish producers affected.
Steel manufacturer breaks contracts with customers
At the end of January, first isolated reports, then more and more media and finally also the Italian Assofermet reported that a major Italian manufacturer was refusing to honor its existing contracts. Unless customers pay an extraordinary scrap surcharge (Source).
The reason given for this action is the lack of availability of stainless steel scrap and the rapidly rising cost of raw materials for steel production.
Tip: Look for reliable and trustworthy partners that honor and preserve years of customer-supplier relationships.
Safeguard expires in June 2021, unless…
In early February, 12 EU member states, in cooperation with Eurofer, write to the EU Commission. The letter calls on the EU to maintain existing safeguards on a wide range of steel products. (Source)
Eurometal calls on EU to take care of downstream industry
Eurometal is one of the first associations to call for an end to Safeguard. They strongly point out that if prices and availability continue to be so dramatic, there will soon be no downstream domestic market for steel products.
At the same time, they point out that European manufacturers would almost only produce for export, e.g. to the USA. And it has become impossible for domestic distributors and service centers to meet their needs in the domestic market. Because they lack the possibility to import cost-effectively from third countries. (Source)
Container crisis further exacerbates procurement problems
To make matters worse, since Corona erupted, there has been a logistical container disaster not only between Europe and Asia, but Asia and the rest of the world. Containers for transporting goods are stranded all over the world, except where they are needed most: Asia (Source).
This poses further challenges for importers and purchasers of steel and stainless steel. In addition to the shortage in Europe, there are also the import restrictions imposed by Safeguard. Further efforts to introduce anti-dumping and anti-subsidy measures are further weakening the availability of material.
Asian market increasingly focused on itself
Deterred by Section 232 duties, EU Safeguard and further anti-dumping measures, more and more Asian steel producers are focusing on the domestic market. As a result, supply for export to Europe and the rest of the world is also tightening.
With the increase in nickel, iron ore and an emerging general upward trend in raw material costs and an additional tightening of export supply in Asia, prices continue to rise. (Source)
Tip: Create new channels for purchasing. Now is the time to do it.
Anfia calls for an end to Safeguard
The steel procurement problem has long since ceased to be an isolated incident. The Anfia automotive association in Italy is calling on the EU to prevent an extension of Safeguard measures at all costs. The cost explosion has become unbearable for the automotive industry. (Source)
Assofermet complains about long delivery times in Italy
The Italian steel consumers’ association Assofermet complained a few days ago about delivery times extending into July. And launched a letter to the EU Commission demanding an end to the Safeguard measures. (Source)
In its letter, Assofermet sees the existence of the entire strategic steel sector threatened – if there is no improvement in the supply situation and an end to the Safeguard measures. The steel shortage must end.
Tip: Order new stainless steel in good time! Even if the price may not currently meet your requirements. Delivery times are more likely to become longer than shorter.
New steel not until fall: First major EU stainless steel producers report delivery times for August 2021
Market sources have told us in recent days that EU stainless steel mills can no longer meet the needs of the European market. And that this shortage will last for at least 9, if not more likely 12 months. Then the first reports reached us that a major EU producer will not be able to supply stainless steel from new production again until mid to late August 2021. (Source)
Tip: Don’t wait for improvement. Take action now. The market will not change for now.
United States: Not only the EU hit hard
Steel purchasers in the United States are also complaining about skyrocketing prices and long delivery times. In addition, a brutal winter storm is sweeping across the USA. Massive power outages are occurring, causing major problems for many energy-intensive mini-mills. (Source). And, at least in the short term, will not bring relief to existing challenges.
Here, the Reuters agency reports very recently that the downstream industry in the United States is facing major shortages of steel and rapidly rising prices (Source).
The powerful Coalition of American Metal Manufacturers and Users (CAMMU) had already called for an end to the Section 232 tariffs a few days ago. And in doing so, defied louder calls for an end to steel tariffs imposed by former President Donald Trump. (Source)
Tip: Tap into the skills of our market experts in Asia, Europe, the United States, and the Gulf region.
Outlook for the coming months
At the moment, there is nothing to suggest that the situation in the steel and stainless steel market will improve significantly. European and US steel mills are fully booked until well into 2021. Market protection measures are currently blocking many import opportunities. The steel shortage will therefore be with us for a while yet – probably until the end of 2021, more likely until 2022.
The challenge here is to react smartly and quickly. Adapt to the changed market conditions and find new purchasing and procurement opportunities.
Right now there is a great need and desire for trusting and reliable partnerships between customers, traders and suppliers.
We currently see that it made sense and was good to prepare ourselves and create opportunities.
5 expert tips on what you should definitely do now!
- Create new channels for purchasing. Now is the time to do it.
- Look for reliable and trustworthy partners that honor and preserve years of customer-supplier relationships.
- Order new stainless steel in good time! Even if the price may not currently meet your requirements. Delivery times are more likely to become longer than shorter.
- Don’t wait for improvement. Take action now. The market will not change for now.
- Tap into the skills of our market experts in Asia, Europe, the United States, and the Gulf region.
You have questions about how you too can solve your procurement problems. Simply contact us. We will find solutions – also for you.
We at the Gerber Group have been trading in stainless steel worldwide for over 20 years. We are your experts when it comes to purchasing, import, logistics and services. Information is a vital part of this. Because only then can you and we make the right decisions. Do you have any questions? Contact us now.
Disclaimer: Many things here represent our opinion. Others are information from the Internet. We can therefore never claim to be correct or complete. And never base a business decision solely on the news you receive from us.