EU buyers expect domestic HRC price uptick, but unlikely to reach mills’ target prices
European hot-rolled coil buyers anticipated an uptick in domestic prices on Jan. 10 even though there remained uncertainties about mills being able to achieve their target levels.
Concerns regarding lack of real demand made some market participants hesitant about mills’ bullish targets as major steelmakers restarted idled blast furnaces, which would result in higher supplies in the coming months.
“Demand remains an issue,” a German service center source said. “Steel consumption of [original equipment manufacturers] expected to be 20% down in 2024.”
Tradable value for domestic hot-rolled coil was estimated at Eur700-750/mt ex-works Ruhr and market participants expect that prices would reach Eur750-780/mt ex-works Ruhr soon. Latest deals were also reported at Eur720-730/mt ex-works Ruhr.
Mills were offering HRC at Eur800/mt ex-works Ruhr as most were left with little material left for delivery in the first quarter 2024 and majority of offers reported for April-May delivery.
Platts assessed the price of domestic HRC stable on the day at Eur730/mt ex-works Ruhr Jan. 10.
Lack of interest in imports also aided sellers’ sentiments.
Surging freight rates due to geopolitical conditions in the Red Sea region made material from Asia-the major import origin, less attractive to buyers. In addition, the safeguard quotas for Asia-origin coil have been exceeded in the first quarter and also expected to be instantly filled in the second quarter. And buyers do not want to commit to purchases that would be custom cleared only in the start of the third quarter.
“Import market is half-dead,” a Germany-based trader said. “Exporters do not want to sell commodity material to Europe as they have logistics challenges caused by situation at Red Sea. So, any available offers are for material with higher added value.”
Asian mills offered HRC at Eur670/mt CIF Antwerp but no volumes were heard booked.
Platts assessed the price of imported coil in Northwest Europe up Eur10/mt on the day to Eur670/mt CIF Antwerp on Jan. 10.
Market activity in Italy remained sluggish with mills gauging the price directions before making offers.
“This is the first week on activity [after holidays] so almost nothing is going on,” an Italian mill source said. “But I think we will be ready to go close to Northern European mills’ offer levels when we make offers.”
Market participants estimated tradable value of domestic HRC at Eur700-750/mt ex-works Italy or delivered South Europe, depending on the buyer or the mill.
Limited offers were reported at Eur800/mt ex-works Italy or delivered South Europe, based on buyer and sellers’ locations.
Platts assessed the price of domestic HRC in South Europe up Eur20/mt on the day at Eur720/mt ex-works Italy on Jan. 10.
Author Rituparna Nath, Maria Tanatar
European CRC, HDG offers rise as market activity gradually recovers after holidays
European mills have either increased or they were preparing to rise domestic offers for cold-rolled and hot-dipped galvanized coil in the week to Jan. 10 while trading activity has started to recover after Christmas holidays.
Major Northwest European steelmakers have increased offers on Jan. 9 for both CRC and HDG to Eur900-920/mt either ex-works or delivered, depending on location of particular mill and buyer.
“New offers are too high, but it makes sense for the mills to make the move and we will see some price recovery,” a German distributor said.
A lot of market participants have been concerned that real demand would not be strong enough to support a sustainable price recovery.
Although buyers have been mainly holding back from new deals taking time to estimate the market, they reported tradable values higher than a week earlier, although still below target prices of the mills.
The bullish sentiment has been supported by full order books of the mills; Northwest European steelmakers have been offering April-May arrival coil.
Limited interest in imported coil caused by geopolitical tensions in the Red Sea region and higher freight rates also contributed to the upwards sentiment in the market.
Platts assessed domestic cold-rolled coil prices in Northwest Europe at Eur830/mt ex-works Ruhr on Jan. 10, unchanged on the day and up by Eur35/mt on the week.
Tradable values have been heard at Eur800-850/mt ex-works Ruhr and offers at Eur920/mt ex-works Ruhr.
Platts assessed domestic prices for hot-dipped galvanized coil up by Eur70/mt on the week to Eur860/mt ex-works Ruhr on Jan. 10.
Tradable values have been reported at Eur850-870/mt ex-works Ruhr and offers at Eur900-920/mt ex-works Ruhr.
Author Maria Tanatar, Rituparna Nath
Platts is part of S&P Global Commodity Insights.
HRC prices climb higher in Europe on tight supply
Major integrated steelmakers in Northern Europe increased their offer prices for April-delivery HRC to €800 ($875) per tonne EXW, following a similar move by ArcelorMittal earlier this week.
But most buyers said that such an offer price was “unrealistic,” considering the lack of support from real steel demand.
“European mills are trying to bring spot prices in line with long-term contracts,” a buyer in the Benelux region told Fastmarkets.
“Most mills have quite good order books and the lack of competitive imports is also supportive of a price rise, but not to the level of €800 per tonne ex-works,” the buyer added.
Buyer estimates of the tradable value varied between €700 per tonne ex-works and €740 per tonne ex-works.
The range is quite wide because most buyers have just returned to the market after a two-week winter holiday break and are still digesting the new prices.
“It’s hard to say what the real market level is. We will see in the following weeks, when restocking starts, but it seems realistic that the mills will be able to consolidate at around €740-750 per tonne ex-works in January — but no higher,” a steel service center source said.
Sources said they expected to see “cautious” restocking, with bookings likely to be limited to “what is strictly necessary” in terms of tonnages, because the sustainability of the acute uptrend in the flat steel market is still questionable.
“Real steel demand is not there,” a buyer in Germany said. “It’s not going down, but it’s not moving up either — so these steep price rises seem to gaining strength from supply issues,” the buyer added.
Fastmarkets calculated its daily steel hot-rolled coil index domestic, exw Northern Europe at €728.75 per tonne on January 10, up by €5.42 per tonne compared with €723.33 per tonne on Tuesday January 9.
The index was also up by €33.33 per tonne week on week and by €43.33 per tonne month on month.
In Southern Europe, meanwhile, Fastmarkets calculated its daily steel hot-rolled coil index domestic, exw Italy at €715.00 per tonne on January 10, increasing by €10 per tonne from €705.00 per tonne on January 9.
The index was up by €25.42 per tonne week on week and by €49.58 per tonne month on month.
An offer for March delivery coil from one integrated mill in Italy was heard at €720 per tonne delivered (equivalent to €705 per tonne ex-works).
But sources told Fastmarkets that the price from that mill was not really reflective of the market because it has “has financial problems and is quite unreliable.”
Another integrated mill in Italy was said to be about to give a firm offer price by the end of this week, with buyers expecting that to come in around €770 per tonne delivered (or €755 per tonne ex-works).
On Wednesday, buyer sources estimated the market level at €700-730 per tonne ex-works and said that tighter supply was likely to continue to support price rises through January.
“Italy is traditionally more open and more reliant on import deliveries. Now, with [the EU] quota for ‘other countries’ already exceeded and ongoing shipping problems in the Suez canal, imports are not really manageable,” a buyer source in Italy said.
“Overseas [HRC] suppliers are largely out of the market with very few offers heard this week,” the source added.
As of January 9, around 1.23 million tonnes of HRC was awaiting allocation in the “other countries” category in the first quarter of 2024, despite the quota being set at just 923,594 tonnes, according to EU customs statistics.
Sources told Fastmarkets that the duty to be paid on imports of HRC under this category was likely to be around 6.3%.
There were few overseas offers of HRC to Europe on Wednesday, but one Indian supplier was offering March-shipment HRC at €650 per tonne CFR, Fastmarkets understands. However, several sources suggested that this offer was no longer standing and new offers from India will be closer to €700 per tonne CFR to Europe.
And HRC from South Korea was on offer at €660-670 per tonne CFR to Italy.
Published by: Julia Bolotova
Swiss Steel supplies reduced-emissions steel to SFB Group
Swiss Steel will supply its proprietary Green Steel Climate+ products to Schwäbische Formdrehteile (SFB Group), a German maker of precision parts for fluid technology. SFB aims to lower its Scope 3 footprint, which covers purchased materials, Kallanish hears from the German fabricator.
Swiss Steel and SFB previously conducted a joint workshop with a focus on production using Swiss Steel’s XTP, Xtreme Performance technology. This technology enables the thermomechanical rolling of almost any conventionally produced standard steel, according to Swiss Steel.
An ultra-fine microstructure (< 5 µm) can be created through the targeted application of heat and force. This production technique emphasises property characteristics in the material that can otherwise only be achieved by using higher alloy contents or complex, cost-intensive additional operations, the steelmaker explains.
Following intensive discussions, SFB and Swiss Steel have agreed to exclusively source Green Steel Climate+ from the plants in Switzerland (Steeltec) and Germany (Deutsche Edelstahlwerke Speciality Steel) from January 2024.
Christian Koehl Germany
Italian, EU tube prices hike on HRC rises
Italian and wider European welded tube prices are set to increase in January, pushed up by the further hikes in hot rolled coil values implemented by European producers this week, Kallanish hears from re-rollers.
Tube discounts are falling after Italian re-rollers pushed up prices last month. However, values are lagging behind the HRC deal price hikes seen in the European market.
ArcelorMittal is now reported to be offering HRC in Italy at €800/tonne ($876) base delivered for March shipment, up some €60/t compared with offers registered in December at €740/t base delivered (see separate story).
Re-rollers find themselves in need of updating their price lists, with some communicating to their customers they are decreasing discounts to the level of 32 and 33 points with immediate effect. Next week, the level of discount will be pushed down further, to 30 points, which will not be enough to cover costs if HRC transactions reach €800/t.
A source argues that HRC prices are increasing too fast, meaning there is no other choice for coil derivative product sellers but to implement strong increases. In Italy, discounts have now reached some 34-35 points, and about 36 points in other European countries.
The workhorse tube grade 40x40x3 is pegged at about €850/t ex-works, barely enough to cover processing costs. With the new HRC values, prices should surpass €1,000/t, Kallanish notes.
Tube processing costs continued to increase in 2023, with financial costs, particularly, rising 20-25% over 2022. This weighed heavily on steel processors due to their large stocks of coils and tubes.
Natalia Capra France
UK scrap supply sufficient, export restrictions ‘catastrophic’: BMRA
The UK generates sufficient ferrous scrap to meet increased future demand driven by the domestic industry’s transition to electric arc furnace steelmaking. Scrap export restrictions would have a “catastrophic negative” impact on prices and jeopardise scrap merchants’ business continuity, says the British Metals Recycling Association (BMRA).
Citing a recent UK Steel report, BMRA points out the UK steel industry will need between 4.2mt and 7mt of scrap annually by 2050, compared to 2.5m t/year today. The country currently produces 10.6m t/y of scrap.
“The UK is not stripping itself of a resource through exports but simply maximising its collection and recycling levels. Any restrictions could lead to recycling levels being compromised,” the association says in a note seen by Kallanish.
“Metal recyclers in the UK only export because the domestic market is not large enough. As domestic demand grows, metal recyclers will comfortably meet this demand; as long as the economics are there,” it adds.
Referring to the UK Steel report’s assertion that exports should be governed around “better environmental regulations”, BMRA says under current regulations, waste can only be shipped to countries that operate to equivalent standards as those found in the UK and EU.
“It is also surprising that UK Steel raises both environmental and social concerns about export markets, yet the UK is content to import from said countries,” BMRA continues. “This is why any standards regarding sustainability must be applied across the whole supply chain.”
“There is also an assumption that exporting what it terms ‘lower quality scrap’ means that non-ferrous metals within that load are not recovered. This is perplexing as no matter where they operate, steel mills do not want large residual volumes in the mix. Even if these non-ferrous metals were recovered in the UK, much of these arisings would still be exported due to a lack of processors/foundries in the UK,” the association notes.
“The UK Steel industry must recognise that scrap steel is a globally traded commodity with a price set on the international stage. The delivered quality of scrap is linked to the demands from the purchaser, be they domestic or overseas. Metal recycling companies would be willing to make investment in further innovation if it was clear the UK steel industry was willing to pay for these improved grades,” BMRA concludes.
Adam Smith Poland
Italian coil market goes quiet following increases
Italian coil prices are set to increase again as producers are either communicating increases or not quoting at all.
The news that ArcelorMittal – as well as other major suppliers – have raised European coil offers yet again has frozen purchases in Italy. Buyers believe this to be “too strong an acceleration”, following the round of increases just before the winter holiday break.
ArcelorMittal is now reported to be offering hot rolled coil in Italy at €800/tonne ($876) base delivered for March shipment, up some €60/t compared with offers registered in December at €740/t base delivered. Hot-dip galvanized coil is offered at €920/t base delivered in Italy.
Other domestic producers are considering a similar level of offers. The move is being supported by the fact that long-term negotiations for coil supply to the automotive sector advanced positively in the final weeks of last year (see Kallanish 10 January).
Service centres, perplexed by the further hike, tell Kallanish they are now considering alternative sources of procurement. Buying from the import market is however difficult as buyers are expected to pay in January up to a 7% safeguard duty on HRC and 9% on HDG to clear material through customs after EU safeguard quotas were exhausted.
The duty on HRC equates to around €40/t additional cost, which makes purchases from the import market too risky. Traditional suppliers of quality HRC such as Vietnam, Taiwan, Japan and Egypt are expected to sell less in Italy in the coming weeks. An allocation of Indian material was still available at the beginning of the week at €650/t cfr Italy but depleting extremely fast, while Turkish material is expensive.
However, despite the €40/t cost, some sources believe purchasing on the import market remains an option as the gap between imported and domestic material would remain wide enough if HRC transactions reach $800/t base delivered.
In the Italian domestic market, several sources indicate €720-730/t base delivered as an achieved transaction price. The strong offer increases have caused purchasing activity to go quiet this week. However, both re-rollers and service centres will be in need of purchasing material soon, with no other option in the short term than to buy domestically. For the moment, some buyers intend to destock. Several service centres agree they will have to be united and unflinching in increasing their coil derivative prices.
Natalia Capra France
European steelmakers restart blast furnaces after shutdowns as coil prices rise
The first quarter of 2024 is kicking off with European steelmakers slowly resuming production, suspended since mid-2023 to maintain subdued steel prices.
In their attempt to end the downtrend in the European coil market, caused by low demand, competitive imports and sufficient stocks among distributors, steelmakers reduced production and some temporarily closed blast furnaces. This helped to achieve the price rise. A lack of competitive imports in January due to filled safeguard quotas and rising freight costs and lead times due to logistical issues in the Suez Canal has also contributed to the positive sentiment.
Among the main mills that temporary took offline their blast furnaces were ArcelorMittal in Belgium, France and Germany, Salzgitter’s in Germany, Liberty in some of its sites in Central Europe and Tata Steel in the Netherlands.
Salzgitter in early January restarted its Blast Furnace A in Germany after a 100-day reline. The blast furnace has an annual production capacity of 2 million mt of pig iron and Salzgitter said part of the reline was to secure pig iron supply within the transformation towards lower carbon emission steelmaking by 2033. ArcelorMittal restarted mills in Ghent, Belgium, and Bremen, Germany, in November and December, respectively. It is not clear when the company’s blast furnace in Fos-sur Mer, France, will restart.
Many mills that had idled blast and basic oxygen furnaces either for maintenance or due to unprofitability have either restarted them or are planning restarts in the first quarter.
ArcelorMittal Zenica in Bosnia and Herzegovina is reported to be preparing for the restart of production, a company spokesperson told S&P Global Commodity Insights on Jan. 10.
“If everything goes according to plan in the field, in the coming days we expect the start-up of the blast furnace, followed by the successive start-up of other production facilities,” the spokesperson said.
Liberty Dunaujvaros, Hungary, restarted its rolling mills and hot-dipped galvanized line in January, but blast furnaces remained idled with no clear schedule for restart, a company spokesperson told S&P Global on Jan. 10. Liberty’s Galati steelworks in Romania is expected to restart soon andLiberty Ostrava in the Czech Republic is still temporary idled and market sources said it is unlikely to resume operation in the near-term.
Liberty’sGalati steelworks in Romania is expected to restart soon, as well as its operations in Dunaujvaros, Hungary, after that the company restarted its production at its rolling mills and hot-dipped galvanized line in January, a company spokesperson told S&P Global on Jan. 10. Liberty Ostrava in the Czech Republic is still temporary idled and market sources said it is unlikely the restart of that blast furnace will happen any time soon.
At Tata Steel IJmuiden, Netherlands, one of the two blast furnaces remains in operation while another has not yet been restarted against the original plans to resume production in December. The furnace is now expected to be back in operation in February. Tata Steel Port Talbot, in the UK, reported that its both furnaces were working.
In the Netherlands, one of Tata Steel’s two blast furnaces is working and the other is expected to restart production by February, while its two UK blast furnaces are both working.
In the UK, British Steel is running its Queen Anne blast furnace and the Queen Bess blast furnace is being brought online and will restart production at full capacity in February, according to a spokesperson. The Queen Victoria blast furnace has been retired.
According to a World Steel Association report issued Dec. 21, Europe produced 22.2 million mt of crude steel January-November 2023, down 6.3% from the year-ago period, as demand for steel products was down.
Platts assessed domestic hot-rolled coil prices in Northwest Europe at Eur730/mt ex-works Ruhr on Jan. 9, up from the 2023 minimum of Eur600/mt ex-works Ruhr on Oct. 25. Platts is part of S&P Global.
Northwest European mills increased their target prices on Jan. 9 to Eur800/mt either ex-works or delivered, depending on a mill and buyers’ location, citing full order books and lack of competitive import. Majority of the region’s mills have been offering April-May delivery coil.
The decision by European steelmakers to resume blast furnace operations left some market sources concerned the price rise might be short-lived.
“There are no signs of demand recovery and mills are bringing furnaces back in operation,” a German service center source said. “We are running into the risk that the prices would drop as soon as more furnaces return and the lead times would end up being shorter than they are now.”
Others, however, believe that the sustainable uptrend is possible.
“Not all furnaces are back, mills try to keep production rates under control and we generally would not see sharp rise in production as some mills were using their slabs from stocks so output would not jump that much,” a mill source said. “And it takes time for furnaces to reach normal production rates.”
Authors: Annalisa Villa (annalisa.villa@spglobal.com), Maria Tanatar (maria.tanatar@spglobal.com)
