European HRC prices don’t rise despite mills’ efforts, although cheapest options vanish
The lowest prices that had been available earlier in October have disappeared from the market, sources said.
“The mills cannot really maintain prices below Eur600/mt ex-works as production costs are high,” a South European service center said. “As for import, there are few offers just below Eur600/mt CIF South Europe, and they are uncompetitive. It also seems that safeguard quotas will not be filled for the first quarter, so buyers will have to buy from local suppliers.”
Lack of competitive import offers, combined with production cuts in Europe, have been supporting domestic coil prices.
Germany’s ArcelorMittal temporarily idled blast furnaces No. 2 and No. 3 at its Bremen site Oct. 1. ArcelorMittal has also shut blast furnace A at its steel plant in Ghent, Belgium, and was planning to close a furnace at its Fos-sur-Mer site in France. Blast furnaces at the Salzgitter plant in Germany and Tata Steel in the Netherlands have also remained idled for maintenance.
Those factors, however, have not fully offset negative effects from weak demand. Trading activity has remained limited from both end-users and distributors.
“Neither mills nor traders see moves in the market,” a German service center source said. “Therefore, I do not see possibility of increase. Still, the mills are looking for every single ton to book and still are ready to give discounts for reasonable quantity. In my opinion, mills are now collecting orders if there are any, may schedule volumes for the first quarter and half 2024 in order to fill up their production as much as possible.”
Some market sources, however, said buyers have started to slowly return to the market, although the volumes remained below normal for this time of the year.
“Order books of big mills are not as bad and stocks of distributors are not as high as some market participants claim, so some restocking should start soon, and prices are unlikely to move down,” a Northwest European distributor said.
Platts assessed domestic prices for hot-rolled coil in Northwest Europe down by Eur5/mt day on day at Eur605/mt ex-works Ruhr Oct. 19.
Tradable values have been heard at Eur590-620/mt ex-works Ruhr, with the majority of data reported at Eur600-610/mt ex-work Ruhr.
Platts assessed domestic prices for hot-rolled coil in South Europe unchanged day on day at Eur600/mt ex-works Italy Oct. 19.
Tradable values have been reported at Eur600/mt ex-works Italy. Some sources also reported achievable prices at Eur580-590/mt ex-works Italy, but the information was not widely confirmed in the market.
Author Maria Tanatar
Platts is part of S&P Global Commodity Insights.
Blastr signs cooperation for clean electricity
Blastr Green Steel (Blastr) has signed a letter-of-intent (LOI) with Norwegian power company Sogn og Fjordane Energi (SFE) for long-term supply of clean electricity to Blastr’s pellet plant.
The pellet plant is projected to be built on Lutelandet on the west coast of Norway, to supply feedstock to Blastr’s ultra-low CO₂ steel plant currently under development in Inkoo, Finland. In August, Blastr selected the Lutelandet industrial area as a potential location for the development of a plant for converting iron ore pellet feed into direct reduction (DR) pellets. The site has established industrial infrastructure, access to renewable energy, and a deepwater port at a strategically placed North Sea location.
Under the LOI, Blastr and SFE will work together to establish a long-term power supply agreement, Kallanish understands. The parties target signing a final agreement by the end of 2025, subject to Blastr attaining relevant regulatory approvals and making a final investment decision for the Lutelandet plant.
Blastr also has an LOI with Redcar Bulk Terminal (RBT) at Teesside, United Kingdom, as another potential location for the pellet plant. By considering two sites in parallel, Blastr maintains optionality during the development process to optimise the green steel value chain.
Christian Koehl Germany
German mills call for intervention on power costs
The voice of Germany’s steelmakers, federation Wirtschaftvereinigung (WV) Stahl, has issued another call on the Government to provide for an easing of the electricity costs that keep devouring the margins of mills.
“We urge the government to provide for lower electricity prices, as our member companies are in the midst of an unprecedented transformation,” says WV Stahl’s managing director, Kerstin Maria Rippel. In order to achieve change in technology, in particular for decarbonisation, companies depend on affordable power more than ever before, Kallanish learns from Rippel.
She points out that especially the cleanest route of making steel, electric arc furnaces, is also the worst hit by power costs. The situation is all the more painful, as most EAF mills are medium-sized companies.
An immediate cause for the call were the latest crude steel production figures, which for EAFs in August declined year-on-year for the 18th time in a row. In the first eight months of the year, EAFs produced 6.8 million tonnes of crude steel, which was some 12% below the corresponding 2022 period. With only 707,000 tonnes made in August, the output was even lower than the previous low point in 2009, during the financial crisis, WV Stahl underlines.
Production from basic oxygen converters deviated only minimally from the previous year, with 17.6m tonnes made in the first eight months. Both routes taken together produced 24.3m tonnes, down 4% y-o-y.
Christian Koehl Germany
Trade, demand indicate EU HRC prices bottomed: GMK
The downward price trend in Europe for hot rolled coil and other flat products has bottomed, according to Ukraine-based consultancy GMK Center.
Speaking at Kallanish Flat Steel 2023 in Istanbul on Thursday, GMK chief executive Stanislav Zinchenko stressed that underlying data point towards stability in end-use demand in Europe in the second half of 2023 versus H2 2022.
“We calculate that by the end of the year, end user demand overall in Europe will be marginally higher compared with full year 2022. We have seen a slowdown since July, but we have not seen a dramatic fall,” Zinchenko said.
According to the latest outlook issued by Eurofer in July, EU real steel consumption should grow 0.3% year-on-year in 2023. This outlook could nevertheless be revised downwards in the coming weeks.
Despite the uncertainty, GMK believes the latest price drops in Europe were mainly dictated by import competition. “In October, nevertheless, we see that import offers of HRC in Europe have stopped being competitive; therefore, imports’ negative pressure is easing,” Zinchenko observed. By the end of the year, steelmakers in Europe are expected to try and lift offer prices, he added.
GMK expects HRC prices in Europe to fluctuate in the range of €640-750/tonne in 2024. “With the current raw material costs, we see €640 as the floor for the market,” he noted. This outlook is based on iron ore prices remaining above $105/t and coking coal above $250/t.
According to Kallanish indices, HRC prices in both Italy and northern Europe have been suffering from downward pressure since the beginning of the second quarter. In recent weeks, the market has confirmed the view that prices are near bottom, but a real recovery of transaction levels has not yet materialised.
Emanuele Norsa Italy
Green steel arrival to create ‘two-tier’ market: conference
The global steel market may rapidly divide into one customer base that is primarily purchasing green steel and another, legacy segment procuring so-called “grey” steel, according to panellists at Thursday’s Kallanish Flat Steel 2023 conference in Istanbul.
“We are going to see a two-tier steel market,” said Thomas Hörnfeldt, vice president for sustainability and public affairs at Swedish green steel pioneer SSAB. “We can see that there is, among the customer groups, a clear interest in green steel.”
Luca Faralli, vice president of sales at Danieli, agreed a bifurcated market is inevitable. While “decarbonisation is the master, for our children and our grandchildren,” Faralli noted, the movement towards green steel will happen at a different pace in different regions of the world. The two-tiered path will be temporary in the sense that the entire global market will coalesce around carbon-free steel production eventually.
Hasan Akbulut, technical affairs director at Turkish steel association TCUD, highlighted four “myths” of decarbonisation in steelmaking: Green steel is too expensive and customers will not pay for it. Low-carbon technology is not yet a reality. There is not enough suitable iron ore. Metallurgical coal is critical, and therefore carbon capture will be a necessity.
Akbulut identified real hurdles to industry-wide decarbonisation, however. One is that there are at least 22 blast furnaces under construction, with more than 100 additional projects planned, primarily in China, India, Indonesia and Vietnam. Plus, there is not enough government funding available for the industry to transform itself and access enough clean energy from the electric utilities.
“Saying is simple, but paying is not going to be so simple,” Akbulut emphasised. He added EAFs’ share of steelmaking in Turkey will be 85% in 2050 versus 75% today.
Faralli outlined approximately five pathways for blast-furnace and electric-arc-furnace-based steelmakers to reduce carbon output. Danieli has developed, for example, a “Digimelter” system to improve efficiency and reduce carbon footprint.
With a particular focus on EAF solutions, Danieli is also developing equipment to optimise scrap processing. Ferrous scrap usage is projected to grow to 1.05 billion tonnes in 2033, from 655 million t today. Faralli recognised the challenge for steelmakers to source that much volume but also emphasised that technology is available to handle impurities including unwanted copper content.
“So, a new approach to the scrap market must be implemented,” he urged. “We have to pre-select the scrap and pre-process it.”
Malvika Shetty, a pricing analyst with Kallanish Index Services who tracks clean-energy projects globally, said a green steel objective is a primary driver of some of the hydrogen development and other green energy investments. Shetty acknowledged the regional differences, often borne of practical factors. Australia, for example, gravitates toward solar and wind projects because of its tendency to enjoy sunny weather and consistent wind. In North America, natural gas is more in focus.
SSAB is heavily involved in a hydrogen storage pilot along with its zero-carbon steelmaking initiative. Hörnfeldt said the storage aspect holds great promise in the Scandinavian countries “for a cold, dark winter night when there is no wind and no sun”.
SSAB started its fossil-free steel pilot project in 2020 and has already produced almost 1,000 tonnes. The company forecasts as much as 1.3mt of production by 2026. There is demonstrable demand from the construction, automotive and industrial equipment segments.
The global steel industry is responsible for an estimated 7-8% of carbon emissions. Danieli’s technology thus far is, at least, helping the industry envision its ability to achieve the zero-carbon goal by 2050. “The target can be reached,” Faralli said. “It is not at hand, but with some work, we can be there.”
Dom Yanchunas USA
CBAM creates costs, import issues; scrap critical: conference
The recently-introduced Carbon Border Adjustment Mechanism (CBAM) will create additional costs for European producers and issues for importers, said panellists during Kallanish Flat Steel 2023 in Istanbul on 19 October.
CBAM is part of a long investment journey taken by EU steelmakers to transition their production to low emissions. Nevertheless, steelmakers are set to struggle to compete in the global arena with CBAM in place.
GMK Center chief executive Stanislav Zinchenko said the EU is supporting the European steel industry with subsidies and identified CBAM as another EU protectionist measure. Tata Steel Nederland markets and pricing director Ronald de Haan, on the other hand, explained that CBAM is not a trade measure but a system to level the playing field and a necessity to safeguard future generations.
Turkish Flat Steel Import, Export and Industry Association (Yisad) chairman Tayfun İseri claimed that Turkey is already producing green steel due to the large share of EAFs in total production. The EU should import from Turkey if it wants to turn green sooner as its transition will take time, he added.
Given the transition to EAF-based production in order to achieve CBAM targets, Stemcor managing director distribution Dick Sands said scrap will become a critical feedstock. “Scrap is the new gold”, he commented, warning that countries that are dependent on imported scrap, like Turkey, are likely to suffer procurement difficulties in future.
McKinsey senior expert Steven Vercammen said that the cost of producing from scrap is expected to increase remarkably in the future alongside the CBAM rollout and increasing restrictions on scrap exports.
On 1 October, CBAM was implemented in its transitional phase. The permanent system is set to enter into force in 2026.
Burcak Alpman Turkey
Northern European long steel producers look for prices to rise on higher costs
Fastmarkets’ weekly price assessment for steel reinforcing bar (rebar), domestic, delivered Northern Europe, was €600-620 ($633-655) per tonne on Wednesday, unchanged from a week earlier.
Most market participants expected prices to go up by €20-40 per tonne in the coming week because of slow import trading and rising energy costs.
The weekly price assessment for steel wire rod (mesh quality), domestic, delivered Northern Europe, was €600-605 per tonne on Wednesday, stable week-on-week.
Published by: India-Inés Levy
European HRC market digests recent rises; activity slow
Earlier this week, several European steelmakers announced small price rises for HRC averaging €10-20 ($11-21) per tonne, to around €635-650 ex-works, claiming this level was the bare minimum they could accept due to rising costs.
Sources also said that some re-rollers were offering HRC at €610 per tonne ex-works.
Buyers in general were unwilling to accept even such a small increase.
“There is plenty of [HRC] available in the market, stocks are full at ports and European mills have four-week lead times on average. In fact, we are counting on price reductions,” a distributor in the Benelux area told Fastmarkets.
“We will not buy [at the] new price levels because we think prices might go down a bit more. Some mills are offering lead times of two to four weeks, so why hurry?” a steel service center source said.
European mills have started to cut output to balance the market and support the price hikes, but buyer sources expect the effect of this will be delayed.
“Very few furnaces have been actually been taken offline, so — once again —mills have started doing things too late. I expect some real effect on the market only in the first quarter 2023,” a distributor in Germany said.
Buyer estimates of achievable prices for HRC in Northern Europe came in at around €600-620 per tonne ex-woks on Thursday.
Fastmarkets calculated its daily steel hot-rolled coil index domestic, exw Northern Europe at €615.96 per tonne on Thursday, down by €0.92 per tonne from €616.88 per tonne on October 18.
The index was down by €2.79 per tonne week on week, and down by €19.04 per tonne month on month.
In Southern Europe, meanwhile, the corresponding daily steel hot-rolled coil index domestic, exw Italy was €596.67 per tonne on Thursday, up by €5.79 per tonne from €590.88 per tonne on October 18.
The Italian index was up by €0.04 per tonne week on week and by €26.66 per tonne month on month.
Offers from local mills were reported at €600-620 per tonne ex-works on Thursday, while buyers said the tradable level was no higher than €580-600 per tonne ex-works.
Most buyers said they doubted that the new offer prices could be sealed in deals, given the ongoing slow demand and short order books at steel mills.
“The consensus price for HRC in Italy would be around €600 per tonne ex-works,” a local trader said.
Asia-origin HRC imports for end-December shipment were on offer to Italy at around €580-600 per tonne CFR, mainly from Vietnam, South Korea and Japan.
Published by: Julia Bolotova
Southern European long steel producers withdraw offers amid rising input costs, weak demand
But they expect mills in Italy to soon return to the market with higher offers.
Production cuts were considered the most viable current option given current demand levels, sources said.
Fastmarkets’ weekly price assessment for steel reinforcing bar (rebar) domestic, exw Italy, was €575-620 ($607-655) per tonne on Wednesday, stable week on week.
“Producers have stopped [all] sales and are considering increasing prices based on their new production costs,” a buyer source in Italy said. “Energy and gas are more expensive, [while the price of] scrap is stable at a high level, so producers are considering setting the new rebar price at about €630 per tonnes.”
A second buyer source told Fastmarkets that mills had stopped selling and suspended their offers.
“We are now waiting for new prices from the mills. Maybe they will go up bu €30-50 per tonne, due to increasing energy cost,” the source said.
A trader source said: “It is difficult to establish a price for today, because the steel mills have closed sales since last Monday. There is a stalemate between buyers and sellers.”
Fastmarkets’ weekly price assessment for steel reinforcing bar (rebar), domestic, delivered, Spain, was also unchanged week on week at €590-615 per tonne on Wednesday.
Wire rod prices in Southern Europe also remained stable amid weak demand and the stand-off between mills and buyers.
Fastmarkets’ price assessment for steel wire rod (mesh quality), domestic, delivered Southern Europe, was €570-590 per tonne on Wednesday stable week on week.
Just like rebar, weak demand and high input costs have resulted in a stalemate in the wire rod market.
“We are in a place of extreme crisis,” a producer source told Fastmarkets. “Wire rod buyers are crushed between very low market demand and the impossibility of being able to import new material from abroad.
“[The European import] quotas have already been filled and the European steel mills have cut production because it is not convenient from an economic point of view to [carry on as they were],” the source added.
Published by: India-Inés Levy