In Europe, there have been increasing media reports of longer and longer lead times at steel mills and serious delays in the delivery of steel already ordered. For example, andreas Schneider, a well-known steel market analyst, said: "The changes in the steel market are getting crazier and crazier. Steel demand in Germany is at its lowest level in 11 years this year. Galvanized sheet and cold rolled coil are most affected. Several local steelmakers are fully booked through March, according to MEPS, a leading firm.
The reasons for this situation can be summarized as follows:
1. Since the summer, demand in some parts of the steel market, particularly in carmaking, has recovered faster than many expected. In addition, many companies are replenishing previously reduced inventories of materials. By contrast, blast furnace steel production, related to thin plates, is only very slowly getting back on track. MEPS reports that production is shifting from other applications to the automotive industry. Since only a very low percentage of world steel production is used for drum manufacturing, the shift will also affect drum production.
Steel prices in Asia have been much higher than in Europe for much of this year, driven by the strong Chinese market. Combined with import restrictions imposed by the European Union, imports from third countries have not declined significantly this year.
This development has led to high prices for raw materials. Iron ore prices, in particular, have reached six-year highs.
Given tight supply and the sharp rise in spot market prices in recent months, the risk of a significant rise in contract prices for sheet steel products next year appears to be emerging. Professional services are already reporting manufacturers' price announcements. It remains to be seen how much of this apparent price risk will affect the steel drum industry, given that the current increasing restrictions related to corona-disease may once again dampen demand.
Short comments: this news indicates that the rising trend of the steel sheet price, the best way to prevent the lost is to arrange the purchasing plans of drum closures in advance.
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