European producers reluctant to cut HRC prices again amid rising costs
Fastmarkets calculated its daily steel HRC index domestic, exw Northern Europe at €618.92 ($648.02) per tonne on Wednesday, down by €1.08 from €620 per tonne on October 3.
The index was down by €6.71 per tonne week on week and by €40.25 per tonne month on month.
Some offers from integrated mills in the region were reported at €630-640 per tonne ex-works for coil with lead times of four-to-six weeks.
And one source reported an offer at €610 per tonne ex-works from an integrated mill in the region – although this could not be widely confirmed by other market participants.
Buyer price ideas were around €600-630 per tonne ex-works, sources said, but trading in the region remained weak, with the lack of end-user demand seen as the main obstacle.
Distributors and steel service centers have no pressure to restock because most already have “sufficient” inventories, Fastmarkets understands.
“Mills are asking for inquiries and orders, so prices [for HRC] remain under pressure. And because we are approaching the end of the year, consumers would like to [keep] their stock levels low. So a major buying recovery is very unlikely,” a trading source in the region told Fastmarkets.
Most market participants expect HRC producers across Europe to maintain their offer prices above €600 per tonne ex-works due to the rising production costs and to trim their output volumes to balance the market.
“[HRC] below €600 per tonne ex-works would be a catastrophe for the steel mills. European producers now face higher costs due to more expensive raw materials, so we expect them to either maintain a base price above €600 [per tonne ex-works] or to bring down capacity, or both,” a steel service center source in Northern Europe said.
Market participants said that instead of switching off blast furnaces, European mills might reduce output at their rolling mills and stockpile slab instead.
“Producers in Europe are not really willing to bring down crude steel output much due to free carbon-dioxide emissions allocations for next year. So they might just trim production at the rolling mills, which would have the same effect on the market in that HRC availability will be reduced,” a trading source in Germany told Fastmarkets.
Fastmarkets’ calculated its daily steel HRC index domestic, exw Italy at €605 per tonne on Wednesday, stable day on day.
Italian mills were reluctant to drop their official offers below €610-620 per tonne ex-works, while bids from some buyers were coming in at €580-600 per tonne ex-works.
Lead times from local mills were reported at four to six weeks.
Sources said that domestic prices were probably close to rock bottom and that they do not expect to see any more big declines in the near future.
“Costs are rising at [the steel] mills so they are reluctant to go below €600 per tonne ex-works,” a distributor said.
Published by: Julia Bolotova
Klöckner appoints new head of German operations
Klöckner & Co says Felix Schmitz has taken over as new chief executive of Kloeckner Metals Germany GmbH, with effect from 1 October.
He succeeds Bernhard Weiss, who has left the company by mutual agreement, it tells Kallanish. The distribution group recently announced a reorganisation of its top management board, where Weiss was in charge of Europe.
His contract as member of the management board since June 2021 and as ceo Europe was terminated by joint agreement as of 30 September. Group ceo Guido Kerkhoff, in addition to his existing responsibilities, has taken over the management of the group’s European operations. The board will now consist of Kerkhoff, Oliver Falk (chief financial officer) and John Ganem (ceo Americas).
Schmitz joined Klöckner six years ago, and was deeply involved in the group’s efforts in creating a “green” steel brand under the Nexigen name. He will spearhead the unit’s development towards a provider of higher value-added solutions, the company says.
Klöckner did not state if the reorganisation includes other appointments at country companies, like in Switzerland, where the group has a strong presence with subsidiary Debrunner Acifer.
Christian Koehl Germany
Italian distributors rule out price collapse despite slowdown
Italian steel distributors and service centres say product values will “inevitably decline” if the current level of demand and small-volume sales continue in the fourth quarter.
“We are lacking volumes. Our clients continue to order the minimum amount each week. All coil derivatives are falling because service centres are chasing clients and discounting material. It will not be long before the market starts seeing financial trouble,” one source in the sector tells Kallanish.
While values are seen declining, distributors and agents who spoke to Kallanish rule out a collapse because of the high cost of production and processing, which will prevent prices across the market from falling below a certain level.
Purchasing groups are beginning to see financial issues and a general pessimism spreading among their members. Demand for both flat and long products is not seen recovering this month and the entire year is forecast to continue seeing the current low level of consumption.
“Prices are in a phase of stabilisation and apart from some mild movement, we do not see many changes happening in the coming months. Re-rollers and distributors will face serious margin issues. Many do not always manage to cover their costs,” another source comments.
Distributors believe that price increases in this market cannot possibly stick due to the weak performance of some key sectors, such as white goods, machinery and construction. Those suppliers who are well stocked and can offer a wide range of products are in a better position compared to the very specialised ones.
The focus throughout the entire value chain is to buy cheap and keep stocks low. With this objective in mind, five European purchasing groups recently created a large pan-European purchasing unit called Astedis, with the intention to create synergies and mutualise buying efforts (see Kallanish 19 September).
Natalia Capra France