Day: 5 September 2024

They described the market for HRC in Europe as “quiet, if not dead” and said it was the “the weakest in years.”

“Domestic [HRC] prices are under heavy pressure due to oversupply, moderate automotive consumption/buying, a weak construction market and low import prices,” one buyer in Northern Europe told Fastmarkets.

A second bujyer said: “Nobody is in a rush to buy. The market is oversupplied and lead times are short.”

Restocking has not started and steel service centers (SSCs) and distributors were not looking for tonnages in light of the weak demand for steel downstream.

“SSCs have sufficient stock and, in fact, are trying to reduce their inventories,” a trading source in Europe told Fastmarkets. “There is fierce competition, especially between SSCs, because of [too] high inventories and cashflow needs.”

Buyer estimates of tradable prices for HRC were reported at €560-590 ($619-652) per tonne ex-works, depending on tonnage. But the lower end of the range was said to be too close to the cost line and no trades have been reported.

In Germany, offers were reported at €590-600 per tonne ex-works, while in the Benelux area offers came in at €570-610 per tonne ex-works, depending on supplier.

Sources said production cuts could help producers to stop the downtrend in prices and they expect some steelmakers to announce blast furnaces closures in September-October – although no official announcements have been made so far.

Fastmarkets calculated its daily steel HRC index, domestic, exw Northern Europe at €590.00 per tonne on Wednesday, unchanged from Tuesday.

The index was down by €7.00 per tonne week on week and by €30.50 per tonne month on month.

In Southern Europe, Fastmarkets’ corresponding daily steel HRC index, domestic, exw Italy was also unchanged at €590.00 per tonne on Wednesday.

The Italian index was down by €5.00 per tonne week on week and by €30.63 per tonne month on month.

Buyers put the achievable price level at €590-600 per tonne CPT (€580-590 per tonne ex-works), depending on the tonnage.

A small transaction was reported at €600 per tonne CPT but, in general, activity remained limited amid slow end-user demand and a lack of clarity regarding the future price direction.

Import offers were stable to slightly weaker week on week, sources said.

Offers from Turkey were reported at €560 per tonne CFR, including the anti-dumping duty, for lots above 3,000 tonnes, with early-to-mid November shipment.

And an offer from India was heard at $600 per tonne CFR.

Buyers continued reporting HRC offers from China at €540-550 per tonne CFR, including import duties, but no fresh bookings were reported.

“The gap [between domestic and import prices] of just €30-40 per tonne is just not worth the risk. I think more [European buyers] would prefer to book [HRC] of European origin in the next restocking round,” a buyer in Italy told Fastmarkets.

Published by: Julia Bolotova

Domestic prices for European hot-rolled coil remained stable Sept. 4 amid muted activity in the market, with stagnant demand and excess supply placing a strain on market fundamentals.

“At the moment, there are not many people buying,” a trader source said. “Maybe from next week [there will be] some medium to long term agreements.”

“The problem is low demand,” a distributor source said.

Market sources noted that the outlook for the next few months remains bleak, as consumer interest remains lower than usual for this time of the year. Despite mills attempting to lower prices, consumers are not interested, and are looking forward to the beginning of next year, sources said.

“In Italy, I doubt there are service centers that need to buy,” the trader source said.

Interest in imported HRC remains uncertain, especially as a combination of safeguard measures, long lead times and expensive freight rates weigh on market fundamentals.

Platts assessed Northwest European HRC at Eur590/mt ex-works Ruhr Sept. 4, stable on the day.

Tradable values were reported at Eur580-600/mt ex-works Ruhr.

Meanwhile, Platts assessed domestic HRC prices in Southern Europe at Eur590/mt ex-works Italy, also stable on the day.

Platts assessed imported HRC in Northwest Europe stable on the day at Eur559/mt CIF Antwerp and imported HRC in Southern Europe stable on the day at Eur560/mt CIF Italy.

Geraint Moody | Devbrat Saha

Italian crude steel output fell again in July, by 3.9% year-on-year to almost 1.7 million tonnes, local steelmakers’ association Federacciai confirms.

In the first seven months of the year, production slipped by 5.4% on-year to almost 12.5mt, Federacciai says in a note obtained by Kallanish.

In July, the association noted a “two-tier market trend” between long and flat products. Flat steel production fell by 16.8% to 716,000t in July and by 10.7% to 5.2mt over January-July. Longs output increased in July by 4.2% to 1mt and by 0.7% to 7.4mt in the first seven months.

In the first half, Italian crude steel output fell by 5.2% on-year to 10.8mt. It declined by 11.5% y-o-y in 2022 to 21.6mt and by a further 2.5% on-year to 21mt in 2023.

Natalia Capra France

The Polish industry ministry will host a meeting in early November with representatives of steel trade unions and management from steel companies to discuss the “overall functioning of the industry”, industry minister Marzena Czarnecka posted on X.

This follows a meeting with trade unions this week to discuss current steel company order levels, protecting industry jobs, financing investments and ensuring steel plants continue to operate, Kallanish notes.

Like the rest of Europe, Poland’s steel industry has experienced a downturn since the outbreak of war in Ukraine in 2022 amid high inflation and interest rates, as well as geopolitical uncertainty slowing economic growth and, most importantly, hammering the construction sector. Manufacturing has meanwhile been hit by elevated energy and carbon costs. This has been coupled with lower-priced imports as Chinese domestic demand has slowed and resulted in growing Chinese exports that have displaced Asian steel into Western markets.

Largest steelmaker ArcelorMittal Poland ended coke-making in Krakow this year after shutting the hot-end in 2020, while its flagship Dabrowa Gornicza works is eyeing a costly transition to electric arc furnace steelmaking. Plate maker Liberty Huta Czestochowa is insolvent and seeking a new owner, while Celsa, which is experiencing its own financial problems, is widely reported to have put its Huta Ostrowiec plant up for sale.

CMC Poland and Cognor are the country’s other major steelmakers.

Adam Smith Poland

German car producer Volkswagen (VW) is mulling the unprecedented option of closing some factories in Germany, the company tells Kallanish.

“The economic situation has become even more difficult and new players are invading Europe,” company chief executive Oliver Blume says in an official statement. “Germany continues to decline as a business location in terms of competitiveness. In this environment, we as a company must now act decisively.”

According to the company, Volkswagen Passenger Cars aims to contribute a sustainable earnings impact contribution of €10 billion ($11 billion) by 2026. “However, the current developments in the automotive market and the German economy demand further action,” it adds.

For the entire Volkswagen AG group, the priority now is to create the financial scope for investments in future products, without which production capacity at sites will be underutilised.

From the board’s perspective, the brands within Volkswagen AG must undergo comprehensive restructuring. The goal is to optimise product costs, material costs, and sales performance, as well as factory and labour costs, VW notes.

“In the current situation, even plant closures at vehicle production and component sites can no longer be ruled out without swift countermeasures,” the carmaker observes. “The situation is extremely tense and cannot be resolved through simple cost-cutting measures. This is why we want to initiate discussions with employee representatives as soon as possible to explore the possibilities for sustainably restructuring the brand.”

In the company’s view, restructuring based solely on demographic developments is insufficient to achieve the urgently needed structural adjustments for greater competitiveness in the short term. It therefore feels compelled to terminate the employment protection agreement that has been in place since 1994, it adds.

The possible closure of plants in its home country would be a first in the 87-year history of the German automotive icon.

According to German automotive experts, increasing the revenue and profit of the Volkswagen brand is becoming an increasingly difficult mission due to rising logistics, energy and labour costs. The German company is also losing momentum in its biggest market, China, with its EV models lagging far behind rivals, while cheaper Chinese cars are also entering Europe.

Svetoslav Abrossimov Bulgaria

The Spanish coil market has started September in a stable mode, but most market players expect domestic prices to fall in the coming weeks. The decline is seen as a result of lower demand and a slow post-summer industrial recovery, Kallanish understands from local service centre sources.

“Demand from the major consuming sectors is not as we estimated at the beginning of September,” one supplier says. “Despite most steel producers having returned from maintenance, their sales remain very weak. Activity should normalise in the second half of the month.”

Spanish mills’ S235JR grade hot rolled coil quotes are stable at some €610-620/tonne ($676.1-687.1) ex-works base. Some producers are already preparing to reduce their offers by €10-15/t.

“Consumption in the solar energy and household appliances sectors is low. It is not as we expected at the beginning of the second half of the year. There are a good number of projects underway, but demand is far from what was expected to be a stable recovery,” a market participant comments. The automotive industry does not seem to be picking up in Spain, while in Portugal the sector has deteriorated sharply so far this year.

“HRC sales in Spain remain weak and there is nervousness among sellers. Large service centres say they will not accept to offer material at below €600/t, but the international market is putting pressure on them and they will certainly have to adjust their prices in the second half of September,” another source observes.

Meanwhile, HRC import prices in Spain are at between €590-600/t cfr. The market is noticing increased competition in recent months, in addition to the traditional suppliers, coming from Egypt, Japan and Taiwan.

According to market analysts, monthly flat steel consumption in Spain ranges from 250,000-300,000 tonnes.

Todor Kirkov Bulgaria