Domestic HRC prices stable across Europe, trading flat
In Northern Europe, trading remained sluggish, with a “no restocking” attitude being adopted by buyers, sources said.
An integrated mill in the Benelux region was offering July-August delivery HRC at €650 ($695) per tonne ex-works.
Mills in Germany were offering HRC at €640-650 per tonne delivered, sources said, which would net back to €630-640 per tonne ex-works, for July-August delivery.
A re-roller from the Benelux region was said to be offering August-delivery HRC at €620 per tonne ex-works.
A major European steelmaker, which had expected to be able to increase its offer prices, was said to have opted for a price rollover for July-August deliveries in the face of weak demand.
“The market has been stable for more than a month now and there are no fundamentals for a price increase, despite some attempts by mills [to increase prices],” a German buyer told Fastmarkets.
Sources estimated the tradable price at about €620-640 per tonne ex-works.
Fastmarkets calculated its daily steel hot-rolled coil index, domestic, exw Northern Europe, at €633.75 ($678.04) per tonne on Monday, down by €1.25 per tonne from €635.00 per tonne on June 14.
The index was down by €1.00 per tonne week on week and by €4.58 per tonne month on month.
Fastmarkets calculated its corresponding daily steel hot-rolled coil index, domestic, exw Italy, at €630.63 per tonne on Monday, down by €1.25 per tonne from €631.88 per tonne on Friday.
The index was up by €0.63 per tonne week on week, but down by €2.29 per tonne month on month.
In the week to June 14, sources said one Italian integrated steel mill had raised its offer price for HRC by €30 per tonne, to about €680 per tonne delivered.
On Monday, however, most sources said that, for July-August delivery coil, that local supplier was still accepting €650 per tonne delivered (€640 per tonne ex-works).
“The move to announce a price increase to the market was [intended] to [promote] buying activity. There is no chance [of getting an additional] €30 [per tonne for HRC] in such a dull market,” a local buyer said.
Buyer estimates of tradable values for July-August delivery HRC were no higher than €630-635 per tonne delivered (€620-625 per tonne ex-works).
“A rollover [of the HRC price] for August delivery is the best-case scenario for mills,” a second buyer said. “There is no restocking activity.”
Prices for imported HRC have been largely flat on Monday so far.
Suppliers from South Korea and Taiwan were offering August-shipment HRC to Italy at €600-610 per tonne CFR.
“Practically all Asian imports consolidate around €600 [per tonne CFR] plus or minus a few euros,” a steel-service center source in Italy said, “but there is no interest due to new [EU import] safeguard rules.”
Europe low-emission steelmaking buildout could struggle
New low-emission steel mills are more likely to be built where costs and regulation are favourable, in other words not Europe, but CBAM is likely to alleviate some overcapacity pressure in Europe’s steel market. So was the conclusion of a panel at the Kallanish Europe Steel Markets 2024 conference in Milan last week.
Green steel production growth should be catalysed by “new kids on the block” such as H2GS in Sweden and Vulcan Green Steel in Oman, input cost panel participants agreed.
Europe, where 19 mills are planning to produce 48 million tonnes/year of low-emission steel by 2030, “is on track to reinvent itself at a scale that we’ve not seen before. We built up the industry over centuries and now we’re rebuilding it over 10-20 years,” said McKinsey & Company associate partner Alexander van de Voorde. However, the region faces challenges, such as financing, manpower, metallics supply and renewables capacity.
Building green steelworks fuelled by imported hydrogen or ore-based metallics might not be cost-effective. “Green steel mills will be built where policies are more effective,” noted GMK Centre chief executive Stanislav Zinchenko. H2GS has chosen to build its second plant in North America. “Why not in Europe?” Zinchenko asked rhetorically.
On labour availability, van de Voorde added: “Can we in Europe match a project engineer salary in the Middle East? Can we attract expertise from Asia where plants have been built recently?” Given it is not just steel capacity that needs to be built but the necessary networks, pipelines and cement capacity that go with it, the labour market will only tighten further, he added.
Italian steel mills are meanwhile suffering greatly from overcapacity amid weakened demand, which is crimping their margins, said Siderweb chief analyst Stefano Ferrari. Mills’ scrap-rebar spread, traditionally at €100-200/tonne in Italy, has fallen to below €50/t. Italy possess a large number of small EAF mills between which competition is intense. Increasing exports to offset domestic weakness would be difficult to do profitably, however, Ferrari noted.
Nevertheless, the Carbon Border Adjustment Mechanism (CBAM), when it comes fully into force from 2026, will stop 3 million tonnes/year of long steel imports coming into Europe, providing a great opportunity for Italian suppliers to meet demand, Zinchenko pointed out. But it will be mills all across Europe, and not just the Italians, competing for this demand, he added.
Adam Smith Poland
Steel market demand rebound expected in 2025
Lack of trust, not simply high interest rates, concerns panellists at the Kallanish Europe Steel Markets 2024 conference in Milan.
As a result of both, the market participants are hesitant to suggest that demand will increase before 2025.
Alessandro Fossati, managing director of Gamma Trade, says he does not believe a lowering of borrowing costs would be enough to stimulate more consumption this year.
“It’s not enough to cut interest rates to boost demand. Demand depends on trust,” Fossati asserts. “We should have a way to earn back the trust in the economy. That would allow investors to invest and consumers to consume.”
S. Polo Lamiere SPA’s chief executive officer, Tommaso Sandrini, underscores Fossati’s sentiment.
“I do not see any possibility of significant recovery in the investment cycle. …We have all the geopolitical elements that we are discussing, and there is a huge lack of confidence in Europe from my point of view,” Sandrini declares: “I do not see any possibility for demand to increase before the end of the year.”
Julian Verden, Stemcor Group’s managing director for Europe, offers a counter stance.
“If you look at steel consumption, it’s pretty steady globally,” observes Verden. “There is very good demand. It is just not great demand in Europe. The European industries are struggling, but I think that protectionism, like that in the states, will protect our industries.”
Kristen DiLandro USA