BIG STEEL PROBLEM!
BIG STEEL PROBLEM
Little stock of steel coils and plates
Worldwide Steel debacle.
Purpose of this message:
By means of this message we would like to inform everyone about the current status with regard to raw material deliveries and the possible consequences of late, too little or no delivery to Lentink for you as a customer. We urge our customers to read this message carefully on the content.
The whole world is still under the spell of the corona virus. A situation in which human health comes first. Finally, the end is slowly coming to an end, of an uncertain time for every family and company that has lasted for months, in which no one knows exactly what our economy will look like after that time. Fortunately, the limitations caused by corona in which we still find ourselves are becoming more livable by the day and therefore better. As Lentink, we have been doing business with many national and international renowned companies for years. We want to continue and expand this healthily after the corona epidemic in the coming years.
The economy has changed:
In addition to huge price increases, which we already informed you about at the end of last year, the availability of goods and raw materials has become just as dramatic. In fact, goods that we never thought would become a problem are very difficult to obtain today.
Where this is all going and how long it will take, nobody knows at this point, but what we do know is that the current situation presents our company with new challenges. Some of these challenges can be solved, some not, or at least not to the full satisfaction of everyone.
Increased customer orders:
Due to the worldwide increase in demand for goods, we as Lentink have also been confronted with substantial order increases from our European customers in the last two months. This is of course a positive development for Lentink, but it also poses major challenges as a result of the pandemic, which partly led to these strange economic conditions and still does!
As a result of the boom in the economy, global demand for steel has grown faster than expected, as have a number of other important goods and raw materials. That is exactly one of the great challenges we all face today. At the moment it is far from self-evident that concluded steel, purchase and goods contracts are delivered on time or in the requested quantities. Due to the current unreliable logistics flow of steel and goods, Lentink will be given an extra challenge with regard to fulfilling the delivery promises to its customers in the coming months.
A customer suddenly increases an order: Imagine you as a customer increase an order at Lentink in numbers and / or you bring an order forward in time. Under normal circumstances, Lentink then also "brings" the material requirement forward and .... orders extra steel material, to supplement the extra quantity purchased by the customer. That's IMPOSSIBLE NOW . Lentink will no longer receive the extra quantity purchased by its customer SUPPLEMENTED by the steel supplier ! And that's where the problem is now. Therefore, among others, the order increases more NOT to perform by Lentink. The same fact applies to bringing forward orders with regard to the previously issued forecasts, which cannot be acted upon by the steel suppliers. So it makes no sense to bring the order forward, because then there will be a gap in the deliveries and production planning at Lentink and then at you as a customer! Lentink finds this very regrettable, but this is what the current market situation forces us all to do.
Due to the increases in the needs of our customers that started early this year, combined with the amount of steel and other goods and the also faltering logistics flow, Lentink's production is facing increasing pressure on the overall planning of its entire production capacity. .
Lentink's schedule-free flexible time window has been fully deployed to meet the increased needs of our customers. So nowadays it has become almost impossible for Lentink to respond somewhat flexibly to the current fluctuating needs of our customers. We have been very concerned about this at Lentink for months. Our customers must know this and as such communicate internally and externally and anticipate this within their company with the purchasing and planning manager. We will all have to learn to deal with this. Until the end of 2021, there are currently no alternatives for this material and goods problem.
See the STEEL JOURNAL at the bottom of this message!
What decision did Lentink make?
In order to be able to continue to serve our customers properly and to answer your questions as to whether increases and (or) shifts of products are possible now and in the coming periods, we unfortunately have to freeze the customer order flow immediately. If we did not do this now, we foresee major problems in our deliveries and the overall continuity of our two companies. We will have to protect ourselves and our customers against delay in delivery times and in the worst case the entire production chain will stop as a result of non-intervention by Lentink due to the lack of steel.
In concrete terms, this means that we will freeze orders (orders) from all our customers up to and including week 35 of this year 2021. This period starts from Friday 21 May 2021.
If, for whatever reason, you wish to adjust your schedule at the last minute, this is only possible in consultation and after approval of your regular contact person within Lentink. Only after written confirmation of a possible approved change by your contact person within Lentink, you can submit the request internally as approval!
Note: Just changing a forecast or order is not enough as your orders will no longer be uploaded into our electronic system from May 21st due to the order freezing.
We again urge all customers and suppliers to jointly find a positive path in these challenging times, in which production must continue to run as much as possible for everyone in order to be able to keep deliveries as guaranteed as possible.
By working together we prevent stagnation or downtime on our production lines, both for you as a customer and for Lentink as your supplier.
We therefore count on your understanding and full cooperation in this.
The management of Lentink
The Steel Journal
Info from: The Steel Journal of Noviostaal and Metaalnieuws dated 17 May 2021
No substantial improvement is to be expected in the foreseeable future in the now truly disastrous scarcity of steel products. This is reported in the May edition of NovioStaal's Steel Journal. Price falls are therefore not obvious.
In the past 4 weeks, ArcelorMittal, as the market leader, has again increased base prices for hot rolled coils. During the same period, other important steel mills remained largely out of the market, so that customers had no idea where prices were really going. The fact is that until recently, several producers from Central and Southern Europe simply refused to issue quotations for delivery in the 3rd quarter, giving the impression of wanting to wait and see how the market would react to the new prices proposed by the market leader. . Only very recently did some offers come in, but then for delivery times at the end of the 3rd and the beginning of the 4th quarter. ”
However, the scarcity that prevails in the market means that customers are forced to place orders above this price level, despite the fact that the delivery times are very long and at a single factory even until the 4th quarter. For example, stocks at various service centers have fallen to below 40% of the normal size and a number of companies are seriously considering introducing a reduction in working hours. “Not because people have too few orders, but because there is simply too little or no pre-material available to run the production,” according to the StaalJournaal . “For example, there is a huge shortage of galvanized coils, because deliveries by the factories are very delayed and because some steelmakers prefer to supply the automotive sector instead of the service centers and dealers. According to reports, some factories for this product are even completely out of the market for the rest of the year. ”
Another development that could have an effect on prices is the discussion that is currently being held about the current European import duties (Safeguards), which will expire at the end of June. EU steel mills want import duties to be maintained, but traders and service centers point to the prevailing material scarcity, extremely high market prices within the EU and the right to free trade. Import duties would limit the latter too much.
Het StaalJournaal: “If the levies remain, there will be no substantial change in the current material shortage in the short term and therefore no downward effect on the price level. If they are partially or completely removed, more material will enter the market, which will make EU factories more competitive. ” Incidentally, this effect will only be noticeable later in the 3rd or early 4th quarter, because the delivery time for material from Asia is currently approximately. 3-4 months after ordering.
Even then, however, the question is whether sufficient import material is being offered. For example, the Covid-19 pandemic has hit India hard, raising fears that exports will be forced to be limited. Moreover, the question is who now wants to commit to import contracts, while there is no clarity about whether or not import duties will continue to exist? At the end of May there will be more clarity about the future of the current European import barriers.
In addition to these developments, however, the European steel market will also have to deal with the temporary production stop of blast furnace No. 1 at ThyssenKrupp Steel.