EU Steel Distribution: pessimistic outlook for Q4 2024
The latest EUROMETAL Market Sentiment Survey highlights a cautious and somewhat pessimistic outlook for the steel and metals distribution sector as we move into the final quarter of 2024.
Based on 241 respondents for September 2024, the survey gives insights into current activity levels, future expectations, stock positions, and price development. Below is a summary of the findings:
Current Activity Assessment
- September 2024 saw a relatively stable perception of current activity, with responses consolidating below the neutral line. The responses are consistent with the previous months, with little significant deviation from the average.
Future Activity Forecast
- Expectations for activity in the fourth quarter of 2024 show weak activity. There is a clear downward trend compared to previous months.
Stock Position Forecast
- Stock positions are anticipated to remain steady through the next quarter. Data from September 2024 shows most respondents forecasting stock levels at or slightly below current levels, suggesting cautious inventory management in light of market uncertainty.
- The prior months also show a similar pattern, with no significant expectations of stock increases or aggressive restocking by distributors.
Price Development Expectations
- Price expectations for the fourth quarter are leaning towards slight declines. There is a growing belief that prices will decline further, as evidenced by the most significant responses positioned below the neutral axis.
- The previous 2 months have shown a relatively cautious stance, with price expectations more neutral or slightly negative.
The current activity remains stable but consistently below the neutral line, mirroring the trends observed in the past few months. Looking ahead, the future activity forecast for Q4 shows a clear downward trajectory, with weak activity expected. Distributors appear to be bracing for softer market conditions in the near term.
In terms of stock positions, respondents anticipate little change, with stock levels forecasted to remain steady or slightly reduced. This reflects a pragmatic approach to inventory management amid ongoing market uncertainty.
Meanwhile, price development expectations suggest a further decline in the coming quarter. The survey shows a growing consensus that prices will continue to soften, reinforcing the cautious sentiment expressed in recent months.
Overall, the industry appears to be preparing for a challenging end to 2024, with subdued activity levels, stable stock positions, and potential price declines on the horizon.
Interested in our Sentiment Tool? Contact us.
EUROMETAL met French distributors in Lyon
EUROMETAL was present at the FFDM 2024 Convention in the French city of Lyon.
The two-day event began with company visits to EDF Bugey Nuclear Power Plant, specialist copper conductor manufacturer Gindre Duchavany and ArcelorMittal Industeel Châteauneuf specialized in the production of hot rolled as well as forged steel plate.
The XVII Convention was held at the Musée des Confluences, a stunning contemporary museum known for its remarkable architecture, located at the meeting point of the Rhône and Saône rivers.
On Friday, we were welcomed by Pierre Olivier, Mayor of the 2nd arrondissement of Lyon. The day’s program took place under the theme: “The Future is already here!”.
In the era of innovation, where every year gives rise to revolutions, the FFDM has drawn attention to current themes such as artificial intelligence, energy and the environment.
We were able to attend presentations on the conditions for a recovery in the building industry, the possible economic winter after the Olympic summer, health and environmental risks linked to mining sectors, how to welcome an iA collaborator into your teams and how to strengthen collective performance!
InfoAcero magazine for September 2024
Check out the latest issue of our INFOACERO magazine for September!
We highlight some of its contents below:
- Opinion: Mr. José Velasco – UAHE Board of Directors
- Steelmaking: Eurofer Forecast – third quarter report
- Events: 20th Steel Products Forum – Program and registrations
- Metal: Productive Activity and Foreign Trade – Confemetal Current Affairs Report September
- UAHE Training: scheduled courses for October and November 2024
Hydnum Steel partners with Knauf Interfer to expand green steel distribution
Hydnum Steel, a pioneer in green steel production on the Iberian Peninsula, has entered into a strategic partnership with European steel processing and distribution company Knauf Interfer. The collaboration aims to accelerate the adoption of sustainable steel solutions across Europe.
Under the terms of the agreement, Knauf Interfer will purchase green steel from Hydnum Steel for an estimated value of €80 million annually. This partnership will leverage Knauf Interfer’s extensive distribution network, including a trimodal hub in Duisburg, Germany, to efficiently deliver green steel to customers in Central Europe.
Beyond steel supply, the two companies plan to explore opportunities for value-added services, such as cutting, segmentation, and re-coiling. Knauf Interfer’s commitment to transparency will ensure that customers have access to clear information about the carbon footprint of Hydnum Steel’s products.
To further strengthen their sustainability efforts, Hydnum Steel and Knauf Interfer will collaborate on a circular economy initiative. This involves recycling ferrous scrap generated by Knauf Interfer’s operations at Hydnum Steel’s Puertollano plant, creating a closed-loop system that minimizes waste and maximizes resource efficiency.
This partnership marks a significant step forward in the transition to a more sustainable steel industry. By combining Hydnum Steel’s innovative green steel production with Knauf Interfer’s distribution expertise, the two companies are poised to drive the adoption of low-carbon steel solutions across Europe.
European Commission study on the potential extension of the scope of the CBAM to downstream products
European Commission Directorate-General for Taxation and Customs Union (TAXUD) is conducting a Study on a potential CBAM scope extension to downstream products.
The objective of this study is to assess the feasibility of extending the scope of the CBAM to products further down the value chain (downstream products) of the goods that are currently listed in Annex I of the CBAM Regulation (upstream CBAM basic goods).
The purpose of including downstream products is to mitigate the risk of carbon leakage of upstream CBAM basic goods as well as the downstream products.
As part of the study, they are carrying out a stakeholder survey. The aim of this survey is to gather both evidence and the views of relevant stakeholders on the major concerns, areas of consensus or points of contention as regards a CBAM scope extension to downstream products.
Particularly, input is sought on the administrative burden and costs importers of downstream products may face in complying with the CBAM if the scope were to be extended to downstream products.
The survey will be open from today until October 25th, 2024.
You can find the link to the survey here: CBAMScopeDownstream2024
Password: CB4M_d0wnstream
More background information n the objectives of the study can be found in the introductory section of the survey.
Europe HRC market remains weak amid poor buying interest, high inventory
The European hot-rolled coil market remained weak Sept. 27, as restocking activity was low amid elevated inventory and reduced end-user demand.
Market participants expressed hope in the fourth quarter of 2024, with long-term contract negotiations with automotive companies and preparations for the first quarter of 2025. The automotive industry has been hit by worsening macroeconomic conditions and fierce competition from Chinese producers, sources said.
“There is very poor demand, underlined by the automotive industry situation. There is a lot of uncertainty about EVs, and high pressure from imports. Raw material prices have gone down, but still not enough to compensate for such low prices,” a source at a Germany-based service center said.
“Q4 will be an interesting quarter, with the upcoming negotiations with automotives, but stockholders are focused on cashflows for now,” the source added.
Market participants had mixed opinions on whether prices have bottomed out, with some sources expressing optimism that current levels are at least close to or at the bottom.
However, an Italy-based distributor said end-user demand remains low and does not expect any change until the end of the year.
Platts assessed Northwest European HRC at Eur550/mt ex-works Ruhr Sept. 27, up Eur5 on the day. A deal was reported at Eur570/mt delivered Germany, and tradable values were reported at Eur530-Eur560/mt ex-works Ruhr.
Meanwhile, Platts assessed domestic HRC in Southern Europe at Eur535/mt EXW Italy, down Eur5 on the day. Tradable values were reported at Eur530-Eur540/mt EXW Italy.
Sources said current imported HRC prices were not relevant due to comparable domestic prices. The added risks around antidumping investigations, safeguard duties and longer lead times further dampened interest in imports.
Platts assessed imported HRC in Northwest Europe at Eur520/mt CIF Antwerp, down Eur5 on the day.
Meanwhile, Platts assessed imported HRC in Southern Europe stable on the day at Eur525 CIF Italy.
Antonio Marcegaglia: Flat steel prices need to go up in long term
Current low flat steel prices are unsustainable for producers in the long term, according to Antonio Marcegaglia, chairman and CEO of Italy’s Marcegaglia Group.
“If we consider the trend on raw materials in the near future, plus minimum rewards and margins for the mills in order to sustain the large capex the industry as a whole has to tackle, think we would need something like a Eur100/mt ($111.78/mt) increase, from the today’s lowest level,” Marcegaglia told S&P Global Commodity Insights Sept. 26 on the sidelines of Siderweb conference in Vicenza. The conference is held ahead of Federacciai annual meeting.
Platts, part of Commodity Insights, assessed Italian hot-rolled coil Sept. 26 at Eur540/mt base ex-works, down Eur5/mt on the day, and down Eur145/mt since the beginning of the year. HRC Ruhr was assessed at Eur545/mt, stable on the day, but down Eur145/mt since the beginning of the year.
Marceaglia Group is likely to close 2024 with 5%-6% lower steel sales compared with 2023, when it posted Eur8.11 billion in sales, due to overall weak global demand, Marcegaglia said.
“This is more or less what we forecast,” he said. “Price-wise, we have seen a decrease in prices, so also the profitability will be lower, but considering the overall market situation I think we still do OK.”
While the stainless steel market did not start well at the beginning of 2024, they did not do too badly in the middle of the year, he said. On the contrary, the plate segment did well in H1, but was now slowing down.
Commodity steel products in general had been more under pressure, Marcegaglia added.
Marcegaglia Group recently bought Outokumpu’s stainless longs assets and Ascometal Fos Sur Mer, making the company the largest worldwide re-roller and forwarding its strategy to have partial integration upstream.
“This, I think it’s a wise move considering the more difficult international supply chain, the lead time, the duties, the CBAM (the EU’s Carbon Border Adjustment Mechanism) and of course, the low CO2 footprint regulations,” Marcegaglia said.
Overall, the company has been progressing with improvements in terms of efficiency and investment, he said.
In the UK, Marcegaglia Group bought a new electric arc furnace in July that would come online in a couple of years, with Marcegaglia saying the company was looking into a “significant” project to add capacity for a bar mill, mid-bars and big bars at its Fagersta, Sweden, wire rod mill. The project is under study, but was quite likely to happen, he said.
“We are going probably to decide in the next month and then the implementation will be in 15-18 months,” Marcegaglia said.
In Sweden, Marcegaglia produces around 60,000 mt of wire rod and aimed to double its total production with the bar and stainless wire rod production.
In Ravenna, Italy, where Marcegaglia’s mill site has production capacity of 3 million mt/year of steel products, the company is investing roughly Eur35-40 million yearly on various projects, including logistics, Marcegaglia said.
“The significant project we’re talking is now a complete automation of the handling of the coil from when it arrives,” he said. “We are about 40% done with that project,” he said. “So it will take another two, three years, by steps, but that’s one example of improvement and digitalization.”
India: April-Aug finished steel exports fall 40% on year on weak EU demand
India’s finished steel exports over April-August sank 39.6% year on year to 1.92 million metric tons, latest data from the Joint Plant Committee showed, as demand from the European Union weakened sharply.
Finished steel exports to Italy, the leading EU destination, plummeted 48.3% on the year to 360,400 metric tons in April-August. Outflows to Belgium fell 25.6% on the year to 223,300 metric tons while exports to Spain plunged 51.7% to 133,000 metric tons.
Of the total exports in April-August, flat steel exports accounted for 1.45 MMt, down 43.7% year on year.
The lower flat steel outflows were undermined by a 62.8% year-on-year plunge in exports of hot-rolled coil/strips to 410,000 metric tons in the reported five-month period.
The fall in finished steel exports ran counter to imports of the same which rose 33.9% on the year to 3.72 MMt over April-August.
As a result, India has been a net importer for the first five months of the current fiscal year 2024-25 (April 2024 to March 2025) with inflows surpassing outflows by 1.8 MMt.
“The steel sector is witnessing a wave of trade protection measures as countries respond to low-cost imports and unfair trade practices,” the Indian Ministry of Steel said Sept. 24.
The European Union has imposed anti-dumping duties on cold and hot rolled stainless steel, with rates reaching up to 25.30%, and a 25% safeguard tariff on steel imports exceeding set quotas, it said.
“India is vulnerable to global trade diversion, with no trade protection measures in place,” the ministry said, citing the increase in steel outflows from China.
“The price of steel in the domestic market has been consistently falling due to decline in international prices and dumping of steel by China at low prices…(the) Ministry is assessing the situation and will take appropriate action,” it added.
Of the 3.72 MMt of finished steel inflows over April-August, about 1.13 MMt, or 30.4%, originated from China, which by itself was up 31.7% from the year before, also making China the leading supplier to India in the five-month period.
Like the finished steel exports, flat steel products accounted for the bulk of the inflows at 2.66 MMt, up 49.1% on the year. Imports of HRC, the key flat steel product, stood at 1.36 MMt over April-August, surging 79.3% on the year.
Platts, part of S&P Global Commodity Insights, assessed the spot price of IS2062, 2.5-10 mm thick HRC, excluding 18% GST, at Rupee 47,000/mt ($561/mt) ex-works Mumbai on Sept. 27, up Rupee 500/mt day on day but down 19% from Rupee 58,000/mt on Sept. 27, 2023.
Alstom to use SSAB Zero steel in locomotives
Alstom has entered a partnership arrangement with SSAB to procure steel with nearly zero-emissions, Kallanish discovers from an Alstom press release.
The first shipment of SSAB Zero, which is a largely carbon emission-free steel based on recycled steel, is expected to be delivered this year and used in Alstom’s first Traxx Shunter locomotives.
“We are very glad to sign this partnership agreement with SSAB,” says Christophe Gourlay, Alstom chief procurement officer. “By supplying steel with low carbon emission footprint for our Traxx Shunter locomotive, SSAB will contribute in the delivery of Alstom’s sustainable procurement strategy, which includes the reduction of the carbon emissions of purchased goods and services by 30% by 2030.”
By using SSAB Zero instead of traditional steel, Saint-Ouen-sur-Seine, France-based Alstom will significantly reduce the embodied carbon footprint in the material used in its new locomotive platform.
“We are proud to work with companies like Alstom that prioritise reducing fossil carbon emissions in their materials with a clear and ambitious target to decarbonise,” says Huy Nguyen, sales director for SSAB in Southern Europe. “At SSAB, we are committed to largely eliminating CO2 emissions from the steelmaking process and to create a fossil-free value chain with our customers and partners.”
John Isaacson USA
Trump tariffs would create bearish commodities risk: Macquarie
Donald Trump winning the US election and imposing tariffs would have a negative impact on industrial commodities in 2025, Marcus Garvey, head of commodities strategy at Macquarie, said during a pre-LME week briefing in London on 25 September.
“An obvious risk for political implications is if Trump wins, and if he goes through with tariffs as proposed, being 60% on China and 10% on the rest of the world,” he noted at the event attended by Kallanish. “It’s fairly clear it will be a meaningful net negative to the global industrial cycle as it would be a negative shock to US consumption.”
“The US is still the dominant source of global end goods consumption, and the ability to … have a restocking cycle globally would be very, very challenged. If that happens, it is a meaningful bearish downside risk to industrial commodities in 2025,” he added.
Garvey pointed out tariffs are “inherently inflationary” and would also be a net negative hit to the consumer.
“The scope, if it has a negative impact on demand, of the Fed to respond to it, is therefore challenged,” he said, adding that this could create a stronger dollar which would also be negative for commodity prices.
He did not see the potential tariffs as stimulatory for commodities demand, with several reasons why it was negative for demand or price in dollar terms.
Focusing on existing macro perspective, Macquarie economists forecasted a “modest” acceleration in global growth, around 3% year-on-year, over the next six quarters. This would result in a modest tailwind for the sector, with commodity prices expected to be somewhat supported.
Garvey also noted that the causation of the US interest rate cuts by the Federal Reserve was the key driver, with any possible changes linked to the existing market conditions. “It’s the underlying driver, not the rates themselves that are really going to matter.”
Elsewhere, Jim Lennon, Macquarie global commodities consultant, said the consultancy now thinks stainless steel will be the biggest contributor to demand growth for nickel, having downgraded the outlook for batteries, and upgraded the stainless outlook.
He noted the outlook downgrade on the battery side was due to a revision of global electric vehicle sales forecasts from 44 million vehicles by 2030, to 38m, and a lower share of lithium iron phosphate batteries in the mix.
“The stainless market, which is two thirds of demand, has been growing at around 4-5% a year trend and the battery market has been growing at 15% trend growth,” he said. “China, in particular, brought on a huge amount of new production capacity; the price of stainless steel is half of what it is in Europe and the US, generating positive substitution towards stainless steel.”
Carrie Bone UK
