Day: 7 September 2023

North European hot-rolled coil (HRC) prices slipped today as some mills acquiesced to lower prices than their competition.

Argus‘ daily northwest EU HRC index slipped by €3.25/t to €641/t ($686/t).

A German producer was selling November delivery HRC at €640/t ex-works, while a Benelux-based seller was transacting at €645/t delivered Ruhr to some customers. Some were still trying to maintain offers around €700/t, but getting very little traction.

Weakness in manufacturing new orders continued to depress sentiment and apparent demand across the north European steel market. German manufacturing new orders fell by 11.7pc on the month and 10.5pc on year in July, according to figures from the Federal Statistics Office of Germany. Domestic new orders for manufacturers were at their lowest in the last eight years, excluding the plunge caused by the Covid-19 pandemic in 2020.

This contraction weighed heavy in the minds of service centres, leading to continued destocking despite comparatively low inventories. This was exacerbated by concern over the strength of automotive demand going forward.

One north European mill executive said automakers were taking 20-30pc less steel than they had budgeted, as they reduced purchases amid potential supply chain disruption caused by floods in eastern Europe. Another mill executive said existing order books were quite deep, and reductions in end demand would be more moderate, around 2-5pc for the fourth quarter.

A number of buy- and sell-side sources suggest a round of cost-cutting is inevitable should the market situation not change soon.

Italian prices nudged slightly higher today, on higher offer. Argus‘ daily Italian HRC index rose by €1/t to €631.50/t.

The lowest mill offer is around €680/t base delivered for October and November delivery. But €650/t would be more realistic given weakness in the sheet market, one source said. “Customers are not willing to buy. Our costs and other mills’ are high, but the new prices — €700/t for HRC, €800/t for HDG — nobody buys,” one sell-side source said.

However, there were some supply-side constraints, he said. “Stocks are full, ports are full. Quotas will be full from 1 October, so maybe there will be a lack of steel. The positive is that people are not buying from import — due to the risk of the safeguards, big confusion on the Russian declaration measures, and the feeling is that EU mills are not willing to go back in prices. Mills will try to reduce production instead of reducing prices.”

Sellers were hoping sheet prices tick up, sparking some restocking. But there was little evidence mills will reduce output, as they did last year, as margins are just about positive, another seller said.

Turkish material was heard at €620-640/t cif Italy inclusive of duties. Material for the first quarter arrival out of Asia was offered at €615-625/t cif Spain. Ukrainian material was heard close to €600/t cfr Italy. There was talk about large buyers able to get under €600/t cfr from Asian suppliers in the “other countries” quota.

Japanese cold-rolled coil (CRC) was offered at $730/t cfr, whereas Korean material remains at €665/t cfr. There were reports for other offers between €680-700/t cfr for earlier shipment, in October.

Futures prices softened today, perhaps reflecting weak German sentiment caused by the macroeconomic picture. September slipped by €11/t on the CME’s north European HRC contract to €652/t, while October, November and December fell back by €10/t — October and November to €655/t and December to €660/t.

Source: Lora Stoyanova, Argus Media

A lack of support from end-user demand remained the main obstacle to the HRC price increases announced by some producers at the end of August, sources said.

European mills are aiming for €700 ($755) per tonne ex-works or delivered, depending on the region, for October-delivery HRC.

At the same time, some producers have continued selling HRC at €650-660 per tonne ex-works, sources said, with transactions at this level reported in Germany this week.

Buyer sources indicated that the tradable level in Northern Europe was €640-660 per tonne ex-works.

But trading sources reported HRC offers from Italy to Germany at around €680 per tonne delivered.

Buying activity remained sluggish on September 5, however, with buyers postponing purchases, citing uncertainty over the direction of prices, Fastmarkets understands.

“For a sustainable HRC price rebound we need stronger consumption. Even [the steel] mills are not convinced they are going to see an increase in [the number of] deals. Buyers are very hesitant and are not rushing into bookings,” a trading source in Germany said.

“Basically, the current prices in the [HRC] spot market are practically the same as before the summer closures; maybe we managed to get around €10 higher in some deals, but not more. The market is static despite some bullish attempts [by the EU mills],” a mill source said.

Fastmarkets calculated its daily steel hot-rolled coil index domestic, exw Northern Europe at €655.33 per tonne on September 5, down by €3.84 per tonne from €659.17 per tonne on September 4.

The index was, however, up by €4.94 per tonne week on week and up by €9.50 per tonne month on month.

At the same time, Fastmarkets’ calculation of its corresponding daily steel hot-rolled coil index domestic, exw Italy, was €635.42 per tonne on September 5, down by €2.91 per tonne from €638.33 per tonne on September 4.

The Italian index was stable week on week but down €0.83 per tonne month on month.

Italian buyers were also in no hurry to make any bookings, with several sources suggesting that restocking activity would not start until closer to the end of September.

“Buyers are testing the market. Obviously, the increases some mills are aiming for are unrealistic,” a buyer source said.

An integrated mill in Italy was said to be offering October-delivery HRC at €700 per tonne delivered (€680-685 per tonne ex-works), but no trades were reported at that level.

Buyers said the achievable level was around €625-640 per tonne ex-works.

Import offers from India and South Korea for October-November shipment were reported at €610-630 per tonne CFR to Italy, but those prices levels were not considered competitive by European buyers, especially given the long lead times and high safeguard-related risks for some origins.

Published by: Julia Bolotova

Poland’s Industrial Development Agency (ARP) has broken ground together with its partners, Spain’s GRI Renewable Industries and Poland-based Baltic Towers, on a new offshore wind tower factory in Gdansk, northern Poland.

The plant will annually produce over 150 towers designed for the largest planned wind turbines with a 15MW capacity and is likely to consume substantial steel tonnages. Its commissioning is scheduled for mid-2025.

“Offshore wind is currently one of the fastest growing energy sectors. The dynamic growth driven by European energy policy, the energy transformation processes being implemented in Poland, and the adopted act on the promotion of electricity generation by offshore wind farms all aim to significantly increase the share of renewable energy in energy generation,” ARP says in note seen by Kallanish. “Such conditions justify the investment decisions, which not only meet market demand, but also contribute to increasing energy security in Poland and Europe.”

Poland’s Supreme Audit Office said last year Polish authorities have taken insufficient action on developing Poland’s offshore wind power sector (see Kallanish passim). Offshore wind power is a new sector in Poland that is touted to see significant investment in the coming years and eventually supply power to the national grid. Construction of the required infrastructure will consume substantial steel tonnages.

A year prior, Polish steelmakers identified onshore wind power as the only viable power source for steelmaking, amid spiralling traditional energy costs. This will also likely extend to offshore power once it is developed.

Wood Mackenzie said last year growth in the offshore wind market is set to explode, with wind tower tonnage getting heavier, meaning more demand for steel. Almost $1 trillion is predicted to flow into the market over the next decade. By 2031, the average tower will be nearly three times heavier in comparison to a decade before. Offshore wind towers will need nearly 500% more steel in 2031 compared to 2022 demand levels.

Adam Smith Poland

Polysteel, a newly established pre-painted steel manufacturer based in Bila Tserkva, in the Kyiv region of Ukraine, began production in August, after the company was relocated from Kharkiv due to the Russian invasion, Kallanish learns from the firm.

“We were on the verge of commencing production [in Kharkiv] within a few weeks when the full-scale invasion began [on 24 February 2022]. As a result, we had to swiftly relocate under the relocation programme,” a company representative says.

The colour coating line, supplied by Australia’s Bronx Group, has an annual capacity of 100,000 tonnes.

Currently, the company is targeting a monthly production of 5,000t and aims to reach full capacity by the end of next year.

Polysteel primarily sells its pre-painted galvanized coil (PPGI) to domestic markets but also has plans to expand export sales to Europe.

The Ukrainian firm intends to use Turkish-origin galvanized coil as its feedstock. The company points out that despite Russia’s blockade of major ports in Ukraine, the inflow of steel from Turkey has continued uninterrupted.

Elina Virchenko UAE

Northwest European coil mills’ latest price hike announcements are neither in line with each other, nor very convincing, according to regional buyers.

“We do hear of hikes being announced but they do not play a role in direct negotiations,” a manager at a German distributor tells Kallanish. He says the first signals came from Italian mills, then from a pan-European producer, and then Nordic mills followed up. “I hear that [another player in western Europe] is pondering [a hike],” he adds. “But, indeed, only pondering, not more.” He says the hike attempts were of between €20/tonne and €30/tonne ($21.50-31.25).

A manager at a Benelux fabricator tells of a more ambitious announcement from a big mill group, a €50/t increase, which he calls “bewildering, in view of the obvious meagre activity on the market”.

According to the German manager, the lowest point was reached at around €630/t ($677) for hot rolled coil from northwestern mills, or €20 less for HRC from Italy or eastern Europe. Most buyers still see current HRC prices at around €650/t, give or take €20.

A buyer at a German processor says he hears of “modest upward adjustments, with prices of €650-680, and trending towards €700.” But those figures are making their way mostly indirectly by word of mouth. “I have not heard official announcements from the northwestern European mills so far,” he adds.

Another buyer at a service centre has also not heard of official announcements and dismisses all hearsay. “There are always rumours, but, effectively, there is no move,” he observes.

Christian Koehl Germany

Market sources confirm to Kallanish that ArcelorMittal is announcing higher target prices for long products across Europe, in a bid to recover some of the margin loss prompted by increased scrap and energy prices over the summer.

New offer levels are reported to be at €40/tonne above the latest available quotes for all commodity grades, as well as for new monthly and quarterly contracts.

Demand for longs in Europe remains relatively slow, though steelmakers believe that stock levels in the supply chain are depleted and are therefore optimistic that a rebound could be seen soon. “Confidence should come back to the market as we have seen several consecutive quarters characterised by a low demand scenario, something we have not seen since the 2008-2009 crisis,” one source says.

Northern European and Italian rebar prices have remained more or less stable since the beginning of June, according to Kallanish. In late June, ArcelorMittal raised its offers, but this increase was not accepted by the market.

Emanuele Norsa Italy

Steel production in Turkey was up in July for the first time in 14 months, but the share of steel imports also pushed up significantly, the association said.

Turkish crude steel output increased by 7.70% month on month in July, to 2.9 million tonnes, according to TÇÜD data, but over the first seven months of 2023 output was down 13.3% year on year to 18.8 million tonnes.

And Turkey’s wire rod imports increased by 93.30% in the first seven months of the year, TÇÜD said.

Turkey imported 464,862 tonnes of wire rod in January-July under HS code 7213, 87.39% more than the 248,068 tonnes imported in the same period of 2022, according to the Turkish Statistical Institute (TÜIK).

TÇÜD said steel imports from China were up by 84% over the first seven months of the year and said help was need to combat the rise in imports. Hot-rolled flat steel imports under HS code 7208 alone increased by 203.83% to 1,270,983 tonnes in January-July 2023, compared with 418,324 tonnes imported in the same period of 2022, according to TÜIK.

TÇÜD general secretary Veysel Yayan told a local newspaper in Turkey that that steel investments in the Persian Gulf — especially in Saudi Arabia and Iran — would give producers there an energy cost advantage over Turkish steelmakers.

Consequently, he added, the Turkish steel sector needs more competitive energy prices, along with protective measures to limit the amount of cheap imports coming into the country.

Energy costs for steelmakers in Turkey are higher than for steel producers in the Gulf and those in Europe, Yayan said.

The Saudi Arabian steel industry appears to be consolidating under government ownership, with Saudi Basic Industries Corp (SABIC) recently announcing the sale of its steel subsidiary Hadeed SABIC to the country’s Public Investment Fund, which is also purchasing 100% shareholding in AlRajhi Steel Industries from Mohammed Abdulaziz AlRajhi & Sons Investment Company (Rajhi Invest).

Demand for steel in Saudi Arabia is expected to grow significantly due to the country’s Saudi Vision 2030 mega projects.

Published by: Serife Durmus

Although buyers have gradually come back to the market after their summer holidays and have started to inquire for tonnages, traded volumes of HRC remained low.

“We have an impression that most [steel service centers] are trying to reduce their stocks because there is strong competition between them. So there is not much restocking going on in the market now,” a trader from the Benelux area told Fastmarkets.

Leading European steelmakers kept their official offers for October-delivery HRC at €700 ($752) per tonne ex-works, but this figure was “unachievable,” according to buyer sources.

“It is not possible to consolidate higher prices [for processed HRC] in downstream sales, so €700 [per tonne ex-works for HRC] looks far away from reality,” a source from a steel service center in Germany said.

Buyer sources indicated that the tradable price in Northern Europe was €640-660 per tonne ex-works. One mill from the Benelux area was reported selling small tonnages of HRC at €650 per tonne ex-works.

Most market sources said that slow consumption was the major obstacle to a sustainable HRC price rebound. In general, they put their hopes on price stabilization in the near term.

Fastmarkets calculated its daily steel hot-rolled coil index domestic, exw Northern Europe at €648.60 per tonne on September 6, down by €6.73 per tonne from €655.33 per tonne on September 5.

The index was also down by €1.61 per tonne week on week but up by €2.77 per tonne month on month.

And Fastmarkets’ calculation of its corresponding daily steel hot-rolled coil index domestic, exw Italy was €635.00 per tonne on September 6, down by €0.42 per tonne from €635.42 per tonne on September 5.

The Italian index was down by €0.83 per tonne week on week and by €1.25 per tonne month on month.

Buyers’ estimates of achievable levels were around €625-650 per tonne ex-works.

A mill in Italy was hoping for €700 per tonne delivered (€680-685 per tonne ex-works), but slow consumption and low downstream prices made such prices unrealistic.

Meanwhile, buying interest for imported coil in Europe was low due to long lead times and safeguard-related risks.

“There are significant tonnages of import HRC waiting to be customs-cleared for the fourth quarter, sitting in European ports. The risk of having to pay the 25% import rate, due to [a complete take-up of EU import] quotas, makes buyers hesitate to buy,” a trading source in Europe said.

Import offers from India, South Korea, Japan and Taiwan for October-November shipments were reported at €610-630 per tonne CFR to Italy.

Published by: Julia Bolotova

In Southern Europe, local producers were aiming for €750 ($806) per tonne EXW for CRC and €770-780 per tonne EXW for HDG.

Mills in the region could largely offer coil for October delivery.

Buyers, however, estimated tradable values lower at €730-740 per tonne EXW for CRC and €750-760 per tonne EXW for HDG coil.

Continuing demand from end-use sectors, including automotive and construction, was the major stumbling block for a price rise, market sources said.

Restocking mills are hoping for an increase in demand that is likely to happen only in the second half of September and will be limited, sources said.

“Most buyers have sufficient stock and in fact are trying to lower their inventories. My impression is that due to low activity in the construction market and threatening downturn in automotive sector nothing spectacular will happen. Besides high interest rates don’t stimulate investments,” a trading source in Europe said.

Fastmarkets’ weekly price assessment for steel CRC domestic, exw Southern Europe was €740-750 per tonne on Wednesday, down by €10 per tonne from €750-760 per tonne the week before.

The corresponding weekly price assessment for steel HDG domestic, exw Southern Europe was set week at €760-770 per tonne on Wednesday, down by  €10-20 per tonne week on week from €770-790 per tonne.

Import offers for CRC and HDG were largely stable during the assessment week, sources said.

Asian suppliers were offering material for shipment in mid-October/early November, which would mean arrival would be in November and December.

One mill from South Korea was offering CRC to Southern Europe at €685 per tonne CFR.

Japan-origin CRC was on offer to Southern Europe at €695-700 per tonne CFR.

A Vietnamese supplier was said to be aiming for $830-840 per tonne CFR for 0.5mm HDG with z100-120 coating, for October shipment.

Published by: Julia Bolotova