Northern Europe long steel prices steady despite Eurofer’s stark warning on survival of EU steel sector
In the week to November 22, mills attempted price rises in the rebar market; but buyers have so far resisted and somre mills are likely to begin cutting production in a bid to rebalance supply-demand dynamics, sources told Fastmarkets.
But European steel association Eurofer issued a statement on Wednesday highlighting the importance of committing to the green transition to save the industry from irreversible decline and calling for urgent action to be taken the EU and its member states, to avoid the steel and manufacturing sectors becoming obsolete.
But Fastmarkets’ weekly price assessment for steel reinforcing bar (rebar), domestic, delivered Northern Europe, was unchanged at €610-620 ($642-653) per tonne on Wednesday.
Rebar producers were targeting price rises of around €50 per tonne in the week to November 28, but there has been no interest, sources said.
“Offer prices have gone up considerably, with domestic mills asking for up to €50 per tonne or even more, but these prices have not yet been accepted by the market,” a trader source said.
“But there is a very good chance they will be [accepted] in January, when we are back [after the end-of-year] holidays. And some mills will initiate production stoppages for a longer than normal during the coming holidays to get demand in balance with production,” the source added.
And halting production could put upward pressure on prices, Fastmarkets understands.
International scrap prices have fallen as a result of slow steel sales, sources said, and Fastmarkets’ calculation of its daily index for steel scrap, HMS 1&2 (80:20 mix), North Europe origin, cfr Turkey, was $336.95 per tonne on Wednesday – down from $343.01 per tonne on November 20 and down from $360.32 per tonne month on month.
Turkey only booked half the cargoes it would normally, Fastmarkets understands, because slow steel sales mean inventories have been building up and with the end of year fast approaching that is unlikely to change, so production has reduced and less scrap is required.
Fastmarkets’ weekly price assessment for steel wire rod (mesh quality), domestic, delivered Northern Europe, was also unchanged at €600-610 per tonne.
Stark warning
In its statement on Wednesday, Eurofer said that without definitive action, further production cuts, plant closures and a worsening downturn would be the inevitable consequence.
“How many more plant closures, job losses, and stalled decarbonisation projects will it take before the EU and [its] member states wake up? Europe’s de-industrialisation is accelerating, with steel, automotive, renewables and batteries all on the brink,” Eurofer director general Axel Eggert said.
“We urge the new European Commission and EU governments to stop this bloodshed and adopt swift measures on trade, [the carbon border adjustment mechanism], energy and steel scrap, while working on a structural solution to preserve our industry’s competitiveness,” he added.
Market yet to accept higher offers by producers in Southern European steel longs market
Fastmarkets’ price assessment for steel reinforcing bar (rebar) domestic, exw Italy was €560-580 ($591-612) per tonne on Wednesday, stable week on week.
Mills were reported to be targeting offers of €580-590 per tonne in the Italian rebar market, but workable prices were still reported to be in the region of €560-580 per tonne, Fastmarkets heard.
Demand was reported to have improved during the week to November 22, but has since weakened.
“Many mills have raised offer prices to €580-590 per tonne, but this week mills are delivering old orders at lower prices… Demand is weak these days as customers restocked last week at lower prices. But the producers’ intention is to reduce production during the holiday season and then raise prices,” a buyer source told Fastmarkets.
Lower scrap prices could create resistance to the market accepting price rises, sources said.
Fastmarkets’ calculation of its daily index for steel scrap, HMS 1&2 (80:20 mix), North Europe origin, cfr Turkey was $336.95 per tonne on Wednesday, down from $343.01 per tonne one week prior and from $360.32 per tonne a month prior.
Scrap prices dropped this week because of Turkey booking only half the cargoes they would have normally, Fastmarkets heard.
Inventories have been building amid slow steel sales and the approach of the year-end means it is unlikely to change soon so production has reduced and they need less scrap, sources said.
Fastmarkets’ price assessment for steel reinforcing bar (rebar), domestic, delivered, Spain was €580-600 per tonne on Wednesday, unchanged week on week.
Southern European wire rod
Fastmarkets’ price assessment for steel wire rod (mesh quality), domestic, delivered Southern Europe was €600-610 per tonne on Wednesday, unchanged week on week.
Mills attempted price rises in the Spanish wire rod market, but these have not yet been accepted, sources said.
“In Spain, mills are trying to increase prices by around €30 per tonne, but import offers have become very competitive so I am sure that somebody will import and local mills will have to drop offers,” a trader source said.
Import offers of wire rod were reported at $540 per tonne CFR from Indonesia, sources said. Bids were reported as low as $520 per tonne CFR.
IREPAS’ short-range November outlook
European steel association Eurofer highlighted the importance of the European steel industry committing to the green transition to save the industry from irreversible decline, according to a statement issued by the association on Wednesday November 27.
The statement indicated that unless urgent action was taken by the EU and its member states, the steel and manufacturing sectors would become obsolete.
Without definitive action, further production cuts, plant closures and a worsening downturn would be the inevitable consequence.
“How many more plant closures, job losses and stalled decarbonization projects will it take before the EU and member states wake up? Europe’s de-industrialization is accelerating, with steel, automotive, renewables and batteries all on the brink,” Axel Eggert, director general of Eurofer, said.
“We urge the new European Commission and EU governments to stop this bloodshed and adopt swift measures on trade, CBAM, energy and steel scrap, while working on a structural solution to preserve our industry’s competitiveness”, he added.
Crude steel output up in Germany, Brazil, but Russian production shrinks
Global crude steel production increased by 1% to 152.1 million tonnes in October compared with the same month in 2023, but output fell by 1.6% year on year from January to October, according to the latest worldsteel data published on Friday November 22.
Germany
Crude steel production in Germany rose by 14.7% year on year to 3.2 million tonnes in October. But while Europe’s largest steel producer reported improvements in production in October, as well as a 5% increase in output in the year to October, the Germany steel association, WV Stahl, said the “amount of crude steel produced is still at a very low level.”
The year-to-date rise from January to October was mainly driven by an 11% increase in electric or electric-arc furnace long steel production, while basic-oxygen-furnace (BOF) flat steel output rose only marginally (by 2.6%) over the period, WV Stahl said.
The rise could be explained by low production figures last year when production cuts were introduced in October and November to balance supply and demand in Europe’s steel market.
The increase could also be partially driven by increased production of semi-finished steel products for export to substitute for sanctioned Russian material.
Market sentiment and the demand outlook remains gloomy across Europe, however, with sluggish demand in the downstream markets for finished hot-rolled coil and rebar.
Announcements of planned mill closures and production cuts by major European mills prompted a stark warning from Eurofer and calls for action by the European Union (EU) and its member states.
But the European Union’s 27 member states, nonetheless reported a 2.1% year-on-year uptick in crude steel production from January to October, with 109.3 million tonnes produced during those 10 months.
Europe’s nominal crude steelmaking capacity sits well above 200 million tonnes, according to sources, but EU27 production reached just 126.30 million tonnes in 2023 overall, down from 136.30 million tonnes in 2022 and from 152.60 million tonnes in 2021, according to worldsteel data.
Brazil
The only other top-10 steel producing country with significant year-on-year gains in crude steel output in October was Brazil, with an even higher increase of 16.2%.
Steel production rose by 6% over the first 10 months of 2024 compared with the previous year.
But Brazil broke steel import records across the same 10-month period, according to figures from its national steel association Aço Brasil, published on November 21, despite the adoption of a quota-tariff policy, which was created in June to limit imports of certain materials.
And exports fell by 15.5% in the year to October reaching 8.4 million tonnes compared with 2023, according to Aço Brasil.
Inspired by the US, Brazil’s market participants are pushing to increase trade control mechanisms, with anti-dumping investigations under way for various steel products of Chinese origin.
China
Chinese crude steel production moved up 2.9% year on year in October, but fell by 3% from January to October compared with the same period in 2023.
Slow domestic consumption in the world’s largest steel producing country has led to a flood of steel exiting the country into the global market in recent months, with China’s exports of finished steel in October up 41% year on year to 11.18 million tonnes.
Cheap Chinese imports have challenged the competitiveness of European steel products and have led to an increase in trade protectionism in competitor countries elsewhere.
Russia
Russian crude steel output fell dramatically in October compared with the same month in 2023, due to weakening consumption in the country’s domestic steel market.
Major Russian steelmaker Severstal said it expects demand to drop by 5.7% compared with 2023 levels because the high key rate of the Russian Central Bank is limiting financing options and therefore demand, leading to high inventories.
Russia is also not immune to the stiff competition from Chinese steel suppliers leading to slower sales, and sanctions taken against Russia due to its invasion of Ukraine continue to inhibit trading.
Buying interest for green flat steel in Europe muted amid poor market fundamentals
European steel market participants have been digesting the recent news about several new investments in green steel projects put on hold due to challenging market fundamentals.
The economic slowdown in Europe — notably the downturn across key steel-using sectors, such as automotive and construction — weighed on the green steel market as well, slowing down the uptake of decarbonized products.
“Not the best time to pay premiums for green steel, when mills cannot even push €40 increases for gray steel due to lack of consumption,” a buyer in Germany said.
Green steel produced in European electric-arc furnaces, with Scope 1, Scope 2 (direct) and Scope 3 (indirect) greenhouse gas emissions below 0.8 tonnes of CO2 per 1 tonne of steel, has been on offer at premiums of €200-350 ($211-369) per tonne in November.
These offers have been broadly stable during the course of the year, but tradable values for the spot market were lower, sources said.
“Higher premiums of €200-350 per tonne was something mills were getting under long contracts with [original equipment manufacturers],” a buyer said.
Buyer sources estimated the achievable premiums for green steel with that level of emissions would be closer to €50-150 per tonne. Bids were reported at €50-80 per tonne during the week.
One mill source estimated achievable values at €100-200 per tonne.
As a result, the green steel premium for flat steel in Europe was stable, with Fastmarkets’ weekly assessment of the green steel domestic, flat-rolled, differential to HRC index, exw Northern Europe set at €80-200 per tonne on Thursday, stable week on week.
For steel produced in blast furnaces, with reduced carbon emissions of 1.4-1.8 tonnes of CO2 per 1 tonne of steel, premiums were reported at €40-60 per tonne.
A buyer source suggested a premium level of €0-50 per tonne for steel with emissions of 1.4-1.8 tonnes of CO2 per 1 tonne of steel.
One mill offered at a premium of €60 per tonne for steel with emissions of 1.95 tonnes of CO2 per 1 tonne of steel, but this was deemed “too high” by most buyer sources.
Another steelmaker in Northern Europe was offering a premium of €40 per tonne for steel with emissions of 1.8 tonnes of CO2 per 1 tonne of steel.
Fastmarkets’ assessment of the flat steel reduced carbon emissions differential, exw Northern Europe was €0-50 per tonne on Thursday, widening from €30-40 per tonne a week earlier.
Italian consortium intends to acquire part of the assets of Acciaierie d’Italia
The group of companies, led by Marcegaglia, is centered on plants in Novi Ligure, Racconiggia, Salerno, as well as in France.
Italian steel companies, including Marcegaglia, Sideralba, Eusider, Industrie metalli Cardinale, are uniting in a consortium to acquire certain assets of Acciaierie d’Italia. At the same time, the main plant in Taranto remains in the sphere of interests of international investors, il Giornale reports.
The consortium, led by Marcegaglia, focuses on plants in Novi Ligure, Racconigi, Salerno, and one facility in France. Nevertheless, two large companies – Indian Vulcan Green Steel and Azerbaijani Baku Steel – intend to acquire the entire Acciaierie d’Italia complex.
India’s Vulcan Green Steel already had an attempt to acquire Ilva in 2017, but lost out to ArcelorMittal. Azerbaijan’s Baku Steel, for its part, is working closely with the Italian government and is considering the possibility of supplying gas to decarbonize production through a floating regasification unit.
According to sources, both companies have been intensively inspecting facilities in Taranto and other regions. However, due to the complexity of the negotiations and technical nuances, the final decision may not be made until early next year.
The deadline for bids to acquire the assets of Acciaierie d’Italia, which is in administration, is likely to be postponed from November 30 to January 10, 2025, giving companies more time to finalize their decisions.
The sale of the company includes ten assets, of which the key ones are owned by Ilva S.p.A. and managed by Acciaierie d’Italia under a lease until 2030. According to the commissioners, the deal could bring in about €1.5 billion. These funds will be used to rebuild the company’s infrastructure and technological development: €1 billion is earmarked for equipment modernization and another €680 million for the implementation of innovative solutions.
At the same time, Acciaierie d’Italia has faced new environmental challenges. The Italian Ministry of Environment has demanded a reduction in nitrogen oxide emissions from blast furnace No. 4 in Taranto. An Ispra inspection found that the levels exceeded the permissible limits, and the company was given 30 days to resolve the issue.
The Italian consortium is positioning itself as an alternative to international players, emphasizing the importance of keeping part of the production in national hands. However, regardless of the winner, the modernization of Acciaierie d’Italia will be an important step in the green transformation of the Italian steel industry.
On October 15, 2024, Acciaierie d’Italia restarted blast furnace No. 1 at its Taranto plant. As the company said in a statement the day before, this is an important step in ADI’s recovery plan and confirms the commitment of the special commissioners, the Italian government and the company to continue to restore production activities at the steel plant.
Prior to the launch of BF No. 1, only blast furnace No. 4 was in operation in Taranto. Blast Furnace No. 5 has been out of service for several years, while Blast Furnaces No. 1 and No. 2 were shut down a few months ago.
ADI plans to reach production of 1.9-2.2 million tons of steel in 2024. However, sources believe that actual production will be lower. Blast furnace No. 2 is scheduled to restart in the first quarter of 2025.
