HRC market in Europe remains quiet amid lack of trading; mills reportedly mull rises amid rising costs
Distributors and steel service centers (SSCs) in Northern Europe have adopted a “hand-to-mouth” procurement plan and continue to avoid restocking in a volatile market, sources added.
“In fact, destocking is still taking place; in the downstream market, SCCs are competing for volumes. We expect no restocking in October and November,” a source at a SSC in Germany said.
Despite pressure on prices and slow end-user demand, European producers are said to be resisting further price cuts due to high costs.
“The prices for iron ore and coking coal are rising worldwide, while [the HRC market] remains under pressure, and mills have started losing money,” a source in Northern Europe said.
Some integrated producers in Northern Europe reported offers for November-December delivery coil at €630-640 ($662-673) per tonne ex-works, saying this was the “bare minimum due to costs.”
At the same time, buyers’ price ideas were no higher than €600-620 per tonne ex-works.
Lead times were said to be quite short, with one mill able to HRC “within four to six weeks.”
Several sources told Fastmarkets that some European mills were mulling price increases, but pointed out that it would be “a completely cost-driven increase with no support from demand.”
“We heard that [a market leader] plans to announce a price increase for HRC this week [from October 16],” a trading source said.
That, however, was not widely confirmed by other sources by the time of publication.
Fastmarkets calculated its daily steel hot-rolled coil index domestic, exw Northern Europe at €614.75 per tonne on October 16, down by just €2.33 per tonne from the previous calculation of €617.08 per tonne on October 13.
The index was also down by €5.25 per tonne week on week, and down by €20.13 per tonne month on month.
In Southern Europe, meanwhile, Fastmarkets calculated its corresponding daily steel hot-rolled coil index domestic, exw Italy at €595.00 per tonne on October 16, up by just €1.98 per tonne from €593.02 per tonne on October 13.
The index was also down by €10 per tonne week on week and by €31 per tonne month on month.
Italian mills have reportedly been rejecting bids from buyers coming in at €600 per tonne delivered (€585 per tonne ex-works), several sources told Fastmarkets.
November-delivery coil was still available from some local suppliers, sources said.
Producers were trying to maintain offers at €600 per tonne ex-works and above due to costs, while buyers’ price ideas were largely below €600 per tonne ex-works.
Distributors and SSCs in the country were also largely focused on destocking, and therefore were not really interested in new HRC bookings.
“[Hot-rolled] sheets are being sold at around €680 per tonne CPT in the secondary market, and sometimes even below that. There is oversupply and some companies [SSCs, distributors] have lead times of just a couple of days,” a trading source in Italy said.
Imports from Asia for end-January/February delivery were on offer to Italy at around €580-600 per tonne CFR — a price level deemed totally unworkable by Italian buyers.
Published by: Julia Bolotova
Hybrit hydrogen storage facility reduces costs 40%: Vattenfall
Following commercial testing on the electricity market, Hybrit’s hydrogen storage facility has shown the variable cost of fossil-free hydrogen production can be reduced by 25-40%, says Hybrit joint venture partner Vattenfall.
The facility was used specifically on the electricity market for about a month. The mission was to produce hydrogen using fossil-free electricity at a variable electricity price with the lowest possible cost, for example during certain parts of the day or for longer periods when weather-dependent electricity generation was in good supply. The hydrogen was delivered in a steady flow to SSAB.
“Despite the fact that Vattenfall optimised trading and operations against real electricity prices during a period with low price variations, the results were very good. The tests were conducted in a close collaboration between Hybrit Development and Vattenfall. By applying it in actual circumstances, we were able to follow in real time how much money was saved by using what was stored,” Hybrit senior project manager Marie Anheden says in a note seen by Kallanish.
The design itself has proven to be well suited for rapid emptying and filling, interspersed by periods of less activity, Vattenfall observes. The latest effort to lower the price of hydrogen production used a simulation tool, a new optimisation model and the 100 cubic meter pilot hydrogen storage in Luleå.
“These are exciting and important results because hydrogen from fossil-free electricity is one of the keys to transitioning the industry. Large-scale hydrogen storage makes it possible to adapt electricity consumption in a system of varying availability and prices and at the same time can supply the industry with hydrogen more stably and cost effectively. Used on a large scale, hydrogen storage can have a dampening effect on electricity price variations, which would favour investments in new electricity generation from all forms of fossil-free power,” says Vattenfall industry decarbonisation head Mikael Nordlander.
“LKAB will change the entire production of iron ore products to fossil-free iron sponge produced with hydrogen gas, so these are very important results for us,” says LKAB senior vice-president for energy and climate Stefan Savonen. “We will need to produce over one million tonnes of hydrogen and consume over 70 TWh of fossil-free electricity per year when we have restructured the entire operation by 2050. Reducing costs is therefore absolutely necessary.”
Adam Smith Poland
EU coil mills cut output to stabilise prices
Several coil mills in northwestern Europe are restricting output, preferring maintenance over production in a market that does not call for large volumes, Kallanish notes.
ArcelorMittal Bremen currently has both blast furnaces taken out of operation for one week, an unusual state for an integrated mill. It shut down blast furnace 2 for the whole of October for repair and maintenance work. In addition, blast furnace 3 was closed for a “block shutdown” of five days with no specific cause given. The two units have a combined production capacity of 3.6 million tonnes/year of pig iron.
In mid-August, Salzgitter started the reline of its blast furnace A. That measure was already planned last year, whereas Bremen’s measures were communicated at short notice and therefore appear to have been triggered by the market situation.
At Tata Ijmuiden, blast furnace 6 is currently undergoing a major repair and modernisation programme. As is the case at Salzgitter, this will in fact be the last time that Ijmuiden undertakes such a large-scale operation on a blast furnace.
The measures will relieve the market at least somewhat, according to one German buyer. “Bremen has stopped offering plain HRC online,” he says, and notes that the stoppages there came unexpectedly for him, too.
A German service centre manager bemoans that “spontaneous” measures like in Bremen have come too late. He also criticises the mills for the recent massive price reductions, because “you do not generate demand with that”.
Christian Koehl Germany
French rebar ticks up
French rebar deal values are increasing slightly compared to the beginning of the month following the price hike move by some European producers.
Buyers confirm that values have hiked by some €20/tonne ($21) and may continue to rise. The contracts implemented however continue to be only for small volumes of one or two truckloads. Consumption from the construction sector remains limited and buyers are refusing to commit to purchases.
One large buyer says the downward market trend in all flat and long products will persist, adding that “we do not see the end of this”. Buyers are facing squeezed margins and no visibility, which is being exacerbated by the weaker German economy.
Rebar market conditions are difficult, with mesh, beams and wire rod also suffering. One source forecasts that 2024 will be no better for the construction and steel sectors. As French rebar remains pricy, some sources say they prefer to buy cheaper Italian and Spanish material.
Earlier this month, some steelmakers in France, Spain, Germany and Italy pushed up rebar prices by an average of €50/t compared to early September, as prices were near cost levels. In Italy, producers are again stopping sales (see separate Kallanish story).
French rebar prices are hovering between €610-630/t delivered on average, sources suggest.
Natalia Capra France
Worldsteel appoints Nucor’s Topalian as chairman
Nucor president and chief executive Leon Topalian has been elected worldsteel chairman for one year. Last year’s chairman, Jeong-Woo Choi, becomes vice chairman, as does Tata Steel ceo TV Narendran.
Iran’s ARFA Iron and Steel Company and India’s Saarloha Advanced Materials Private Limited have meanwhile been welcomed as regular members, Kallanish notes. ResponsibleSteel, represented by Annie Heaton, has become an affiliated member.
Crude steel output in the 63 countries monitored by worldsteel inched up 0.2% on-year in January-August to 1.26 billion tonnes.
Adam Smith Poland