European apparent steel consumption to improve in 2024, but at slower rate than expected – Eurofer
Apparent demand is expected to recover by 5.6%, rising to 137 million tonnes in 2024, Eurofer said in its first-quarter outlook report on Thursday February 8, revising down its previous upbeat forecast of a 7.6% recovery for the year.
The European regional steel industry association also lowered its expectations for 2023, during which it now expects apparent steel consumption to have fallen by about 6.3% year on year to 129 million tonnes.
In its previous outlook in October, Eurofer said it expected to see a 5.2% year-on-year consumption drop to 132 million tonnes for 2023.
“Improvements in apparent steel consumption are not expected before the first quarter of 2024,” the association said.
But apparent steel consumption in the EU did improve in January, with flat steel prices recovering, supported by restocking.
Fastmarkets’ daily steel hot-rolled coil index domestic, exw Northern Europe averaged €731.73 ($788.32) per tonne in January, sharply up from a monthly average of €688.20 in December 2023. The January average also is the highest since May 2023.
That trend seems to be changing in early February, sources said, and in recent weeks buyers have been trying to reduce inventories and have shown little interest in purchasing.
HRC prices have been edging down in the spot market since February 2, although market participants told Fastmarkets that a full-on downtrend was unlikely because the steel mills have healthy order books and the import options are limited.
“The overall evolution of steel demand remains subject to very high uncertainty,” Eurofer said.
End-user outlook
Automotive
The automotive industry in Europe was one of the few steel-consuming sectors to perform well in 2023, with data from the European Automotive Manufacturers Association showing that new car registrations surged by almost 14% in 2023, with more than 10.5 million new vehicle sales.
Eurofer said automotive output in the bloc will have increased by 8.8% overall in 2023, revised up from its previous recovery rate prediction of 6.4%.
But overall output levels in the sector remain low in historical terms, with the industry continuing to be exposed to external factors and expected to remain at pre-crisis levels seen in 2018-2019. The sector is expected to grow by 0.1% in 2024 and by 0.2% in 2025.
Market participants said that demand for steel coil from the automotive industry has been broadly stable at low levels through 2023 and was not expected to show any significant rebound in 2024.
Construction
The construction industry, meanwhile, is expected to have declined moderately, by 2.1%, in 2023, Eurofer said, revised down from a 1.7% decline forecast in October, after having grown by 4.8% in 2022.
For 2024, Eurofer said construction activity will continue to decline, falling by 0.4% rather than its previous prediction of a 0.2% recovery.
“This negative trend [in construction output] is expected to persist and to extend [through the first half of] 2024, mainly due to the impact of continued monetary policy tightening, via higher mortgage rates, [restricting] housing demand,” Eurofer said.
Among construction sub-sectors, civil engineering is expected to remain the best-performer in 2024 due to support from EU-wide public policies. But Eurofer acknowledged that the effect of policy initiatives has become “increasingly uncertain and difficult to quantify due to the recent deterioration of the economic outlook.”
Weak construction demand has weighed heavily on the European long steel market in recent months, with high interest rates limiting activity, especially in the residential sub-sector, the association said.
“The construction industry is facing pressure from rising interest rates [and] there is a lack of new projects,” a European trading source said.
Fastmarkets’ price assessment for steel reinforcing bar (rebar), domestic, delivered Northern Europe averaged €655 per tonne in January 2024, up slightly by €12.50 per tonne from a monthly average of €642.50 per tonne in December 2023. The assessment however was sharply down from a monthly average €768.13 per tonne in January 2023.
Published by: Julia Bolotova
Polish rebar, wire rod prices decrease slightly amid sluggish demand
Rebar
Polish mills offered rebar at 2,900 zloty ($720) per tonne CPT in the week to Friday, which nets back to around 2,880 zloty per tonne ex-works.
The mills revised their offers downward compared with the previous week, when offers were heard in the range of 2,900-2,950 zloty per tonne CPT, which nets back to around 2,880-2,920 zloty per tonne ex-works. Offers at the higher end of this price range were not available this week, according to Fastmarkets’ sources.
“I don’t think anyone bought anything from Polish mills [even] at their offer price of 2,900 zloty per tonne CPT [last week],” a distributor source told Fastmarkets.
They added that deals for volumes of around 500 tonnes and above were concluded at 2,850-2,860 zloty per tonne CPT last week, which nets back to about 2,830-2,840 zloty per tonne ex-works.
A deal in an even lower range of 2,800-2,820 zloty per tonne CPT for February production was heard last week, which nets back to around 2,780-2,800 zloty per tonne ex-works.
Fastmarkets excluded these transactions from this week’s assessment because they were done in the previous assessment period.
This week, price levels in the range of 2,800-2,820 zloty per tonne CPT were not available in the market, sources told Fastmarkets.
Besides, market activity remained soft this week.
“Demand is still weak, and it will probably not change until March,” the distributor source told Fastmarkets.
“The [market] activity is very low, not much is happening. Buyers are waiting to see where the market direction will go,” a second distributor source told Fastmarkets.
They added that one Polish producer decreased its scrap prices by 50 zloty this week.
“New scrap prices will be available by other producers next week,” the second distributor added. “There are some expectations in the market that other producers might do the same. This can eventually result in slightly decreased rebar prices.”
They estimated workable market levels in the range of 2,850-2,870 zloty per tonne CPT, which nets back to around 2,830-2,840 zloty per tonne ex-works.
A consumer source estimated the tradable market level for volumes above 1,000 tonnes at 2,880 zloty per tonne CPT, which nets back to around 2,860 zloty per tonne ex-works. Fastmarkets excluded this estimation from its final assessment because it is not in line with the volume specifications in its methodology.
As a result, Fastmarkets’ weekly price assessment for steel reinforcing bar (rebar) domestic, exw Poland was 2,830-2,840 zloty per tonne on Friday, down by 40-50 zloty per tonne from 2,880 zloty per tonne on February 2.
Wire rod
Polish mills continued offering wire rod in the range of 3,100-3,300 zloty per tonne CPT in the week to Friday, sources told Fastmarkets. Slightly lower offers were also heard at 3,050 zloty per tonne CPT.
However, demand remained very weak, and no major deals were heard in the market.
The offer price of 3,300 zloty per tonne CPT was not considered tradable by market participants, except for very small volumes.
A third distributor source estimated tradable market levels for wire rod in the range of 2,850-3,000 zloty per tonne CPT, specifying that for volumes between 50 and 100 tonnes the workable price should be closer to 2,850 zloty per tonne CPT.
However, this level was not confirmed by other market participants. They estimated the tradable market level in the range of 2,900-3,000 zloty per tonne CPT.
Thus, Fastmarkets’ weekly price assessment for steel wire rod (drawing quality), domestic, delivered Poland was 2,900-3,000 zloty per tonne on Friday, narrowing downward by 100 zloty per tonne from the previous week’s 2,900-3,100 zloty per tonne.
Import offers of wire rod from Italy to Poland were heard in the range of €675-700 ($727-754) per tonne CPT.
Import offers of the material from European producers were also heard at €660 per tonne CPT.
Ukraine continued to offer mesh-grade wire rod at €660-670 per tonne CPT, and some deals for such material were concluded at prices in that range, Fastmarkets heard.
Published by: Darina Kahramanova
Aperam sees hard times persisting
The European stainless steel market remains “deeply depressed” despite some improvement in the fourth quarter of 2023, says stainless steelmaker Aperam in its 2023 financial report monitored by Kallanish.
“Extreme margin pressure has persisted and volumes reflect an industrial recession in Europe,” comments chief executive Timoteo Di Maulo.
Owing to lower sales volumes and weaker prices, the company’s turnover last year decreased by 19.2% on-year to €6.5 billion ($7 billion). Shipments also declined by 4.8% to 2,198,000 tonnes. Adjusted Ebitda reached €304 million compared to €1.1 billion the previous year.
The stainless and electrical steel division recorded sales of €4.2 billion in 2023 with shipments at 1,550,000t. This reflects a decrease from €5.5 billion turnover and shipments of 1,600,000t in 2022.
The Recycling & Renewables division, the best-performing segment, recorded an Ebitda of €156m last year compared to €86m in 2022 thanks to higher volumes and positive inventory valuation effects. Sales stood at €1.9 billion, against €2.4 billion in 2022. In 2021, the steelmaker acquired German stainless recycling company ELG Haniel for a total value of €357m, including €30m equity (see Kallanish passim).
“This crisis reveals how important the successful integration into raw materials has been for Aperam. In Q4, the Recycling & Renewables division was Aperam’s largest earnings contributor for the first time. Entering 2024, Phase 5 of the ‘Leadership Journey’ – our self-help program – started,” Di Maulo concludes.
The stainless steel market in Europe is going through a phase of destocking and strong stagnation. Steelmakers are grappling with high cost of production and weak sales of coils and derivatives. In the coil derivative sector, aggressive commercial behaviours in certain EU countries are contributing to dragging down prices. The entire supply chain confirms a painful margin squeeze is occurring, Kallanish notes.
Natalia Capra France
Eusider buys Profiltubi, expands tube range offer
Italy’s Eusider has acquired a 100% shareholding in Steel Metal Service Holding Gmbh from investment fund Auctus Capital Partners, Kallanish learns from Eusider.
An Italian antitrust authority document obtained by Kallanish says Steel Metal Service Holding, through Auctus Project Italy, owns Italian tubemaker Profiltubi, which in turn owns re-roller OMV-Officine Metallurgiche Ventura serving the automotive and appliances sectors.
The document states the merger does not “involve the establishment or strengthening of a dominant position”. In an interview with broadsheet Il Sole 24 Ore, Eusider owner Eufrasio Anghileri says the move enables the company to widen its product offer in the tube sector. He adds that last year, the group posted €1 billion ($1.08 billion) in turnover as the company registered weaker prices but mostly stable sales volumes. For 2024, the firm expects stable performance.
Natalia Capra France