European HRC moves sideways amid summer slowdown
The European hot-rolled coil market traded sideways Aug. 4 as most players were absent from the spot market.
Sources said some mills were hinting at future price rises following the summer when restocking activities are expected, but that current trading was limited.
“Mills and end-users are keeping a low profile at the moment,” said a Benelux distributor.
“Our stock is sufficient including for September. Not sure where prices will go, so no reason to buy now,” the distributor added.
An Italian mill offer for September was heard at Eur700/mt EXW Italy minimum Aug. 4 but no business was reported at that level.
Sources said some mills were slowly positioning themselves for expected restocking activity after August and were thinking about increasing offer prices.
However, some sources said this would rather be to maintain current price levels amid a mixed view on sustained price increases in Q4.
The European market is expected to remain quiet in August amid maintenance works and summer stoppages at suppliers.
Platts daily HRC assessments in Italy and in the Ruhr region were assessed unchanged Aug. 4 at Eur635/mt EXW Italy and Eur640/mt EXW Ruhr, respectively.
Platts is part of S&P Global Commodity Insights.
Author Laura Varriale
European HRC market stays quiet while talks of Q4 quota import levels increase
The European hot-rolled coil market remained quiet amid the summer lull while market chatter surrounded increasingly full import quotas which have resulted in material being kept on hold to be cleared at ports, sources said Aug 3.
Sources expect that particularly Italian ports have at least 300,000 mt of HRC awaiting clearance at ports for the quota period starting Oct.1.
According to the European Commission, the “other country” quota for the current quota period (July 1 to Sept. 30) had been exhausted July 25 while the current quota balance for South Korea was shown as critical Aug. 3 with 92.03% filled.
“There will be a lot of material for the end of the year [in Europe],” said an Italian service center.
“Oct. 1 could see big congestions at ports,” said the source, adding that most importers are keeping the material on hold for the next quota period to avoid a 25% duty that applies when quotas have been exhausted. Import offers into Italy were heard at Eur600-605/mt CIF Italy.
Domestic HRC prices in Italy and Northwestern Europe saw no change. One mill source said prices ex-mill would be Eur670-680/mt ex-works Ruhr, while another distributor said prices from Central-Eastern Europe were at Eur620-630/mt EXW, although buying remained limited.
An Italian mill was heard to offer at Eur660-680/mt EXW for prompt.
The daily Platts assessments for HRC EXW Ruhr and HRC EXW Italy remained unchanged Aug. 3 at Eur640/mt and Eur635/mt, respectively.
Platts is part of S&P Global Commodity Insights.
Author Laura Varriale, Maria Tanatar
ISTA to meet UK govt on Tata Steel import concerns
ISTA had called for an immediate solution to make it possible for UK buyers to import Indian material. Sources close to the matter told S&P Global Commodity Insights Aug. 3 that the UK government agreed to meet the trade body in September to discuss the matter.
In the July 27 letter seen by S&P Global that was sent to members late-Aug. 3, ISTA claims that the repeated steel orders by Tata Steel UK could be seen as “an unfairly attempt to manipulate the free market.”
“Like all UK steel producers, Tata benefits from the protection of the Safeguard Measures quota system, but it cannot be considered as fair trading practice to then take up that quota thus preventing importers from supplying their own customers,” the letter said.
“Steel already booked and currently on the water to the UK, destined for independent service centres and manufacturing, will not be able to be customs cleared and utilised – a fact Tata Steel know only too well,” ISTA said in the letter, warning that the lack of import opportunities would have a “devastating and immediate effect on steel manufacturing.”
ISTA suggested several options to resolve the matter: to either create a new import category code for Tata Steel’s own domestic use or changing the quota to be utilized for its intended imports and end-user customers. Another possibility would be to increase the quota volume for the other country category, under which Indian material falls.
Tata Steel to receive new order in Sep
Tata Steel has a 22,000 mt order of Indian HRC arriving in September for clearance under the quota period starting Oct. 1. The quota is expected to exceed immediately, sources said. The company is also said to have received a previous order of Indian material in June to support production of its Port Talbot works while it faced production problems.
Although it is understood that Tata has not received material in the current quota period July 1 to Sept. 30, the quota nevertheless is likely to be exhausted soon. There are 1,105 mt left under the other country quota as of Aug. 3, which means it is considered “critical” where a 25% duty deposit has to be paid. The opening balance was 22,837 mt.
Tata Steel UK declined to make an immediate comment on the matter when contacted Aug. 3 after usual office hours.
In an earlier statement July 27 to S&P Global, a spokesperson had said: “Tata Steel, like most other steelmakers, sometimes complements its own production with supplies from other sources to balance its utilisation of downstream businesses.”
The Platts weekly assessment for UK HRC was at GBP615/mt DDP West Midlands Aug 3, stable week on week, according to data from S&P Global.
Author Laura Varriale
Austria’s June steel production rises on-year
Austria’s steelmakers decreased crude steel production in June compared to the previous month, according to worldsteel data.
Output amounted to 648,000 tonnes, down by 1.8% compared to May, but 2.7% more on-year, Kallanish notes.
In January-June, the country produced 3.78 million tonnes of steel, down 4% on-year.
In 2022, Austria reduced steel production by 4.7% on-year to 7.51mt.
Overall EU output in June fell by 11.1% on-year to 10.6mt. In January-June, EU steelmakers produced 66.3mt, down 10.9% on-year.
Austria’s largest steelmaker voestalpine expects good earnings after a strong 2022/23 fiscal year (see Kallanish passim). It recorded the highest level of revenue and best operating result in its history, surpassing even its record year of 2021/22. The Austrian group’s revenue rose by 22.1% over the previous year to €18.2 billion ($19.2 billion), and Ebitda from €2.3 billion to €2.5 billion.
The firm said in June expectations were more cautious because of the war in Ukraine, among other geopolitical tensions worldwide, and inflation in both Europe and North America turning out to be more persistent than expected. Still, the company expects Ebitda to reach €1.7-1.9 billion in the current fiscal year.
Earlier, voestalpine approved an investment of around €1.5 billion for the construction of one electric arc furnace at each of its two sites in Austria – Linz and Donawitz. These will ultimately replace two blast furnaces by 2027.
Svetoslav Abrossimov Bulgaria
German coil market sees some bottlenecks
Coil buyers in Germany say they have experienced some shortages in recent months. These were nevertheless confined to local suppliers serving high-standard applications and may not have been widely heard in the overall sluggish commodity market.
One player is SSC Becker, Germany’s largest service centre, which has been suffering from hurdles launching the new ERP (enterprise resource system) it introduced in spring. “This has influenced our deliveries, which we regret very much. We kept informing our customers in the interest of a trust-based relationship,” the company tells Kallanish.
Meanwhile, a task force of IT, sales and logistics has worked intensely to overcome those issues. Deliveries are now nearing the volumes they saw prior to the ERP launch, Becker says. However, it also mentions shortages it is experiencing as a buyer, due to insufficient delivery performance by its suppliers.
According to another observer, this points to one mill that declared force majeure in June after heavy rains, but was apparently already struggling with meeting targets before that. “They [the mill] thought they could produce at full capacity, which did not work, so they had to turn down orders in order to return to normality,” he says.
Still, this mill’s case of force majeure was justified, unlike that of Tata Ijmuiden, which was declared for technical shortcomings, he claims. He adds that his company is still in negotiations with Tata about the resulting cancelled volumes. “You do have to concede some loss in such cases, but we solved most of it by negotiating,” he says.
Observers also suggest that ArcelorMittal exaggerated the damage resulting from accidents at some of its mills in Europe, taking it as a welcome argument to keep production down amidst a sluggish market.
Christian Koehl Germany
Italian September tube may hike on costlier HRC
Italian welded tube prices are seen increasing in September, in line with the expected increases in coil values. The welded tube market remains subdued, with demand weak and prices depressed in most European countries, sellers and buyers tell Kallanish.
Tube values continue to lag behind hot rolled coil tags due to weak downstream demand. Uncertainty is dominating the market, which is now quiet due to the August holiday break. Discounts remain at 37-39 points, with purchases implemented only back-to-back and prices unsustainable compared to processing costs.
Commodity grade 40x40x3 product remains at €800/tonne ex-works, which provides practically no margin. While some positive signals are coming from the automotive sector, many other industries are ordering low volumes and distributors are keeping stocks low. Tube sales in July and the first week of August are reported to be weak with no significant restocking occurring.
The Italian and European HRC market is however forecast to become livelier in September and prices to increase, pushed up by the exhaustion of EU import quotas. Third-quarter quotas from Vietnam, Indonesia and other Asian countries are already exhausted, while few tonnages remain from Korea. Buyers can import only from Turkey, whose suppliers are offering higher prices, as well as from India.
HRC buyers say Korean suppliers will give no allocations to Italy for Q4 and new import quotas will expire on 1 October, the same day as they are renewed. Amid the general downturn of the steel sector in Europe, this seems the only good news for September, and both coil and coil derivative prices are seen increasing, albeit gradually. The market remains fragile. Downstream demand and consumer confidence are seen remaining weak, with no surprises until the end of the year.
The target for re-rollers is to reach 35 points for tube discounts. Sources see September HRC prices at €700/t ($766) base ex-works.
Natalia Capra France
Northwest Europe coil prices unmoved, possibly softening
Coil prices in northwestern Europe have seen limited movement and it looks unlikely this will change after the summer holidays. Some sources do not exclude the possibility of a further minor drop in prices.
Although some participants say ArcelorMittal claims to have started to reverse the pricing downtrend, this is not being confirmed from the side of the buyers. In fact, one buyer suggests that September could see another dip, as “the demand just isn’t there”. A spokesman of a distribution group concurs, stating: “We see the trend of softening prices still being in force.” He adds: “With every dip, the [pricing] floor consolidation is coming nearer, though.”
A Benelux service centre manager observes: “Steel demand has slowly continued to rise in recent times.” But then he cautions that “this seems to be mainly a hedge against the risk of possible shortages, but not an economic structural improvement in demand.” Prices of hot rolled coil are seen bottoming at, or slightly below, €650/tonne ($715), with cold rolled and hot-dip galvanized coil fetching €80-100/t more.
Some rather low prices heard earlier for CRC, a mere €40 above those for HRC, applied to sheet sold by distributors, rather than coil sold by mills, a German manager tells Kallanish. “Mills’ offers were rather stable but, downstream, some have sold sheet at intake prices,” she says. “It is crazy, but if one starts, ten others follow suit.”
Import offers have meanwhile risen, with HRC reaching €600/t cfr Antwerp, up €20-30 if including customs fees.
Christian Koehl Germany
European HRC prices stable amid seasonal slowdown
Fastmarkets’ daily steel hot-rolled coil index domestic, exw Northern Europe was calculated at €645.83 ($706.36) per tonne on August 4, up by €0.83 per tonne from €645.00 per tonne on Wednesday August 3.
The latest calculation of the Northern European index was down by €10.17 per tonne week on week and by €35.63 per tonne month on month.
Firm offers in the region were rare, however, with most major mills preferring to hold back, sources said.
One mill in the region was heard offering November-rolling HRC at around €700 per tonne EXW, which was way above buyer estimates of the tradable level at €630-650 per tonne EXW on Friday.
Another producer was offering HRC with lead times in October at €650 per tonne EXW.
“Some mills have thinner order books, so they are trying to find new orders, but because most customers are on holiday it’s quite difficult for them to book anything,” a trading source in the region said.
Trading was practically non-existent across the European HRC market due to the ongoing summer holiday season, with no change is expected until the end of August at least, sources told Fastmarkets.
In terms of the post-holiday outlook, however, European producers were cautiously optimistic and expect to achieve some upticks in prices, driven by an anticipated increase in apparent steel demand.
In addition, the swift take-up of HRC safeguard quotas in the “other countries” category and by South Korea would serve to exclude the most-competitive import supplier from the market, so European mills also expect to see less pressure on prices from imports.
Fastmarkets calculated its daily steel hot-rolled coil index domestic, exw Italy at €636.25 per tonne on Friday, up by €0.42 from €635.83 per tonne on Thursday.
The Italian index was down by €8.33 per tonne week on week and by €21.67 per tonne month on month.
The market in Italy currently remains in “holiday mode,” sources said, with most mills and buyers still inactive.
Some buyers reported tradable prices for September-October-delivery HRC at €630-640 per tonne ex-works on August 4.
But sources said it was likely that Italian mills will try to push for higher prices after the summer stoppages.
“European mills hope that a lack of cheaper imports will help them to regain bargaining power in September,” a trading source in Southern Europe told Fastmarkets.
Seasonal slowdown keeps Polish rebar prices flat; market hoping for demand rebound in September
Rebar offers from three local producers were broadly stable week on week at 2,660-2,680 zloty ($653-658) per tonne CPT (about 2,630-2,650 zloty per tonne EXW).
Transactions were scarce, however, with tradable values reported at 2,600-2,650 zloty per tonne ex-works, depending on the tonnage. Mills in the region were able to offer rebar from stock with quick shipment, market sources said.
Sources said they expect rebar prices to stabilize in the coming weeks and were cautiously optimistic about a pick-up of construction activity in the residential sub-sector in September.
“Demand is still weak, partially due to the vacation season, but also because construction activity is still very slow. The only hope is that new construction projects will start from September and boost demand for rebar,” a trader in Poland said, with the Polish government launching a support program for the nation’s “first home buyers,” offering housing loans with a fixed 2% interest rate over 10 years, with the difference to the actual interest rate covered by the state.
That program, available for young people only for their first house or apartment purchase, is supposed to stimulate residential construction, sources said.
“Right now there are so many applications… for this kind of mortgage, the banks cannot cope, a second trader source said.
“In the past six months or so, there have been very few residential projects in Poland, so soon there could be a shortage of apartments,” the trader added.
Fastmarkets’ weekly price assessment for steel reinforcing bar (rebar), domestic, exw Poland, was 2,600-2,650 zloty per tonne on Friday, stable week on week.
In the secondary market, rebar prices were reported at 2,750 zloty per tonne CPT, also stable week on week.
Imported rebar offers to Poland were scarce due to the seasonal summer slowdown.
A Ukrainian supplier was offering rebar for September delivery, however, at €570 ($623) per tonne DAP border (about €600 per tonne CPT).
And Moldovan rebar was on offer in Poland at €610 per tonne CPT.
Published by: Julia Bolotova
Polish wire rod prices stagnate in slow summer market
Fastmarkets’ weekly price assessment for steel wire rod (drawing quality), domestic, delivered Poland, was 2,750-2,800 ($675-687) zloty per tonne on Friday, unchanged since July 7.
Official offers from local steelmakers for low-carbon, drawing-quality wire rod were reported at 2,800-2,900 zloty per tonne CPT, unchanged since late July, but the upper end of that range was deemed unworkable by most buyers.
Buyers said the tradable value was closer to 2,750-2,760 zloty per tonne CPT.
Trading remained limited in the week to Friday, however, with buyers tending to book only small lots to cover urgent needs.
Sources also pointed out that demand for commodity grade wire rod was slow in Poland.
“There is only demand for niche products, such as special meshes, special wire, etc, so – without specializing in some specific area – there is no way to cover costs. Nowadays, you need very wide range of [wire rod] products and a huge portfolio of customers to break even,” a distributor in Poland told Fastmarkets.
Wire rod import offers to Poland were also limited in the week to Friday, with Italian mills out of the market due to summer stoppages.
One Ukrainian supplier was offering mesh-quality wire rod from stock at €610-615 ($667-673) per tonne CPT depending on tonnage, sources said, stable on-week.
And another Ukrainian supplier was offering mesh-quality wire rod at €570 per tonne DAP border, which nets back to about €600 per tonne CPT.
Published by: Julia Bolotova