EU plate market not seen reviving soon
Northwest European plate market observers believe it will take well into next year for a serious recovery in demand to occur.
“There will be a recession until summer 2024,” one central German buyer predicts to Kallanish. He points to infrastructure project development coming to a halt. “Whatever is not in pre-development now will not be kicked off until March,” he says, referring to offshore pipelines, wind parks, and liquid petroleum gas containers. “Such things need the approval of local authorities and environmental interest groups, before they even get tendered.”
Another example often overlooked is the leasing behaviour of truck fleets. “Many transportation companies give back their leased trucks and do not use the option of buying them,” he says. The parking lots of truck makers are therefore full, because of the returned vehicles, he adds.
High inventory levels at warehouses are also an issue for many distributors. “We could buy cheaply now, to mix it with material from earlier, more expensive, material, to have a better overall price ratio. But then you run into the danger of storing too much material you cannot sell. It’s a dilemma, and every house needs to solve it for itself,” he says.
In fact, he tells of a recent “white week” sell-out, sometimes at intake prices, at those companies whose business year ends in September, to clear their inventory before year-end. This points to one of the biggest European distributors whose fiscal year ends on 30 September.
Another observer concurs that warehouses are selling at the prices they bought at. “Even the big integrated mills are now willing to make concessions, in view of the weak market,” he opines. The price range given by most observers for S355 will be between €800/tonne and €840/t ($842-884) delivered, although some see occasional lows and highs beyond that range.
Christian Koehl Germany
Italian plate sellers see some more demand
Italian plate producers have noticed some return of demand over the past ten days following a long period of quiet and low sales. Distributors and service centres have implemented some purchases, but sales volumes remain limited due to very short visibility.
“We see some more interest from buyers at stable on-week prices on the domestic and export market,” a mill source says. He expects the restocking to intensify in October. Mills and distributors tell Kallanish that stronger demand continues to be reported for S355 grade compared to S275. On average, S275 has slightly declined compared to mid-September and reached €700-730/tonne ($735-767) ex-works, while S355 is being transacted at €740-750/t.
Given the more dynamic market since the last days of September, several sources seem more optimistic for October despite the general uncertainty and low visibility. They forecast values to remain stable this month, with some mild fluctuations.
Imported Asia-origin slab contracts in Italy are rumoured to have been done at $580-600/t cfr, mostly stable compared to mid-September.
Natalia Capra France
European Commission approves Liberty acquisition of Dunaferr
The European Commission has approved the acquisition of sole control of ISD Dunaferr and ISD Kokszoló by Liberty Steel, Kallanish notes from a Commission notice.
The Commission concluded that the notified transaction would not raise competition concerns, given the companies’ limited market positions resulting from the proposed transaction. The notified transaction was examined under the simplified merger review procedure.
Liberty won the auction in June to acquire insolvent Hungarian steelmaker Dunaferr (see Kallanish passim). Earlier in the year, it had signed a short-term management contract to keep the plant operating after it ran out of working capital and raw materials.
Last month, Liberty and China’s CISDI Engineering Co. signed an agreement with the Hungarian Ministry of Economic Development to develop a decarbonisation pathway shifting Dunaferr from coal-based steelmaking to electric arc furnace technology. This will see the installation of a new 150-tonne capacity EAF to be supplied by CISDI.
Adam Smith Poland
European end users foresee fourth-quarter coil price stability
End users forecast relative stability, with some mild, €10-20/tonne ($11-21) downward adjustment possible for Italian coil prices in the fourth quarter.
“We do not see any signs of recovery from here until December and, according to our projections, final demand will not jump in Q1 2024 either. Consumption for our products is some 25-30% below pre-pandemic levels of 2019 and we have a similar situation in all European countries,” one major end user tells Kallanish. He adds that despite the low consumption, he does not see prices of coil in Europe collapsing but rather adjusting downwards due to high production costs.
Among the sectors particularly hit by the economic crisis are construction and white goods, but now also automotive since a few weeks. While the automotive sector ordered good coil volumes in the first half of the year, demand seems to be faltering since July and there is pessimism about its future capacity to support coil prices and sales.
The European appliances industry has been hit hard by the crisis, with its performance in the second half proving to be particularly weak. Activity remains at low levels and sources in the industry are lamenting squeezed margins due to high costs of steel and other components.
One executive in the sector foresees future coil capacity cuts in Europe. However, he notes there is uncertainty among European producers when it comes to production cuts and how to handle a protracted period of low consumption.
Meanwhile, the tug-of-war between Italian service centres and producers continues against the backdrop of weak orders and a production slowdown. Mills would like to increase prices on high production costs but service centres do not see any space for hikes in such a market. The market is uneventful and although hot rolled coil values have fallen compared to September, no one is willing to buy. A large service centre says they are able to resist through October without buying any product.
At present, Italian HRC is quoted at €600-630/tonne ($630-661) base ex-works, with the high point of the range increasingly hard for mills to achieve. Cold rolled and hot-dip galvanized coil levels are at €720-740/t and €750/t base ex-works respectively, sources suggest.
Natalia Capra France
Northwest EU plate prices surrender further ground
As northern European demand for plate is not showing any post-summer revival, prices have given in further, and may continue to do so.
S355 grade is now seeking orientation around the €800/tonne ($842) mark, some quoting delivered, some ex-works. One realistic observer sees the range at between €790 and €840. Others refuse to believe mills would go under €800/t, especially German suppliers.
“Mills are offering at around €820/t now. I can try to bid lower than €800, but they would not concede,” one northern German buyer believes. Others, too, do not see the €800/t mark being undercut by much. “Certainly not from Ilsenburg [Salzgitter],” a manager in Lower Saxony says. But he does not exclude the possibility, as he states that “we are sure the floor has not been reached, as new projects are rare.”
The floor could be where one Ruhr-based manager sees it already, at around €750/t, even from domestic mills, he claims. However, there are not many who concur. He also however hears one high offer at above €850, which gives an idea of the current market divergence.
Normally, domestic integrated mills sell commodity grades in a bundle with higher-end plate, at still a relatively higher price than re-rollers. But that connection has dissolved lately, meaning big mills are more willing to sell off commodity grades by themselves, he tells Kallanish.
Prices for high-grade plate are deteriorating as well, although some high-tensile and wear-resistant grades are holding up better than others, one source says.
Christian Koehl Germany