Assofermet: downstream slowdown, pricing pressure Italian service centres
Reduced sales volumes and high costs continue to plague the Italian service centre and distribution sector, which is wedged between steelmakers and end users, Italian trade association Assofermet says in a market note seen by Kallanish.
In response to the upstream price increases for coils, service centres are now being compelled to raise prices of coil derivatives and pass the hiked costs on downstream. Firms are aiming to enhance financial positions and secure margins for the conclusion of the year.
The prevailing sentiment for December is one of a wait-and-see attitude. “November saw the consolidation of rising [hot rolled coil] quotes from EU steel mills despite much weakened demand from the downstream market, which still does not seem to be waking up. It is precisely this decoupling between the upstream production sector and downstream consumption which both confuses and worries all operators,” the note states.
Steelmakers are under pressure to enhance their financial performance, and the production cuts announced for 2025 are a response to persistently pressured margins. Assofermet is observing a stagnation in demand from various end users, which is preventing any new growth in prices and volumes.
EU producers, however, are rigidly insisting on increasing prices, driven by a reduction in available import quotas alongside anti-dumping duties, which make purchasing from the import market uncompetitive.
In November, distributors experienced a notable decline in volumes, accompanied by reductions in margins and turnover, primarily driven by persistent price weakness.
Assofermet recently launched a new calculation platform enabling coil buyers to assess potential anti-dumping and anti-subsidy duties as part of European Commission investigations. The initiative aims to support members’ understanding of the EU regulations regarding anti-dumping investigations. The calculator assists in evaluating the potential timing and imposition of duties.
Natalia Capra France
Longs market enters holidays, trade challenges loom: Irepas
The global long steel market has entered the holiday season, with significant business activity expected to resume only after 13 January.
Chinese export pressure on global markets, Europe’s steel sector challenges due to high energy costs and weak demand, which has already led to shutdowns, and potential policy shifts in the US are further adding to uncertainty, Kallanish notes from the International Rebar Exporters and Producers Association (Irepas) December outlook.
“Under these circumstances, the situation in the global longs market, where competition remains very tough and more local than global, may be described as unstable and complicated with a difficult, unpredictable outlook,” Irepas forecasts.
Irepas suggests Chinese steel exporters may not have full export order books for the first quarter of 2025 as overseas demand and prices continue to decline. Therefore, “steel prices in the international markets, except in the US, will suffer going forward,” it adds.
Chinese stimulus measures are expected to have a limited impact on limiting steel export volumes in the short term. Domestic prices in China remain low, while production cuts are unlikely, as “Chinese Premier Xi Jinping has pledged that China will meet its ambitious GDP growth target of 5% this year and remain the engine of global economic expansion, and so no production cuts would be anticipated,” Irepas explains.
EU producers are squeezed between weak demand and high costs, limiting their ability to reduce prices while competing with imports. Energy prices in Europe have surged to 2022 levels, prompting mills to temporarily halt liquid steel output or reduce production hours to control supply. “Usually, this would push prices up, but in the current low season, we have to wait and see what happens,” Irepas notes, adding: “It is a good sign that prices have not slid down any further [in the EU].”
In the US, a “not-so-pleasant winter” is expected. “US domestic mills have been keeping prices low and are still offering discounts on already low prices,” Irepas says. “On the other hand, US domestic scrap pricing for December is expected to be down, for the first time in two decades.”
Although interest rates have slightly eased, they remain high for investments. The steel trade may soon become more difficult due to looming additional duties proposed by the new US administration. These duties could trigger retaliatory measures from other countries, further complicating global long steel trade.
Elina Virchenko UAE
European HRC prices steady amid sluggish trading
There was a slight pick-up in trading, but it was related to the expected longer lead times from some suppliers, Fastmarkets understands.
According to industry sources, some steelmakers were planning to extend their winter holiday closures, resulting in longer lead times for HRC.
Fastmarkets calculated its daily steel hot-rolled coil index domestic, exw Northern Europe at €561.88 ($590) per tonne on Monday, down by €0.62 per tonne from €562.50 per tonne on Friday December 13.
The index was down by €1.60 per tonne week on week and by €0.62 per tonne month on month.
Mills in Northern Europe continued aiming at €600 per tonne ex-works for HRC with delivery in the first quarter of 2025, industry sources told Fastmarkets.
However, material was also offered at €570-590 per tonne ex-works, Fastmarkets understands.
Some deals for small volumes were heard at €560 per tonne ex-works.
According to industry sources, the workable market level for HRC in Northern Europe was at €550-560 per tonne ex-works.
In Southern Europe, meanwhile, Fastmarkets calculated its daily steel hot-rolled coil index, domestic exw Italy at €561.25 per tonne on Monday, down by €0.25 per tonne from €561.50 per tonne on Friday.
The Italian index was up by €0.83 per tonne week on week and by €5.25 per tonne month on month.
According to industry sources, local suppliers were heard offering HRC with delivery in the first quarter of 2025 at €580-620 per tonne delivered, which would net back to €570-610 per tonne ex-works.
“The actual levels [in deals] are still far below [the targeted price by mills of] €600 per tonne ex-works,” a buyer source based in Italy told Fastmarkets.
According to the source, suppliers in Italy would probably try another price increase after the Christmas holidays, targeting levels higher than €600 per tonne ex-works.
Meanwhile, a medium tonnage deal of HRC from Italy to Germany was heard at €580-590 per tonne delivered, with the freight cost between the two countries estimated at around €50 per tonne.
Buyers’ estimations for the workable market level were at €550-570 per tonne ex-works.
In terms of imports, Turkey was heard offering HRC to Italy at $590 per tonne CFR, including the anti-dumping duty.
Asia-origin coil was on offer to Italy at €590 per tonne CFR, industry sources told Fastmarkets.
Some volumes of HRC from Ukraine were booked in Italy at €530 per tonne CFR, Fastmarkets understands.
Tata Steel UK to supply JCB with green steel
The green steel would be produced at Tata’s site at Port Talbot in South Wales which is set to undergo a £1.25 billion ($1.58 billion) overhaul.
The steelmaker added that this was the first supply agreement it had made since the announcement of the transformation of the Port Talbot site.
The project includes building a new 3-million-tonne per year electric arc furnace (EAF), which offers a low-carbon alternative to the traditional blast furnace method.
The EAF is expected to be functional at the end of 2027, thus, replacing the two blast furnaces, which were operational a few months ago.
BF5 was closed in July this year, and BF4 was closed in September.
The Port Talbot site produced mainly hot-rolled coil and cold-rolled coil.
The company managed to receive a support package of £500 million from the UK government to fuel its plan to develop a lower-emissions electric-arc furnace-based steelmaking plant.
Tata Steel UK added that JBC is focused on carbon reduction in its manufacturing and will integrate the steel into its machinery range.
“We are fully supportive of Tata Steel UK’s investment proposals and are pleased to be one of the first customers to endorse those plans by making this agreement to secure British-made green steel as soon as it is available,” Wayne Asprey, JBC’s group purchasing director, said.
Market overview
Demand for green flat steel in Europe is still limited and highly regionalized, but premiums for such material have strengthened slightly on a weekly basis because most suppliers refuse to undercut prices much even in the face of low demand, Fastmarkets reported.
According to industry sources, most demand for green steel was coming from the Nordic states.
Fastmarkets’ methodology defines European green steel as “steel produced with Scope 1, 2 & 3 emissions at a maximum of 0.8 tonne of CO2 per tonne of steel.”
Leading European suppliers kept the premiums for such steel at €200-350 per tonne, sources told Fastmarkets.
During the assessment week to December 12, buyer sources estimated achievable premiums for green steel with such level of emissions at €50-120 per tonne, although the lower end of that range was not considered workable by mill sources.
Even slightly higher bids, reaching at €70 per tonne, have been rejected.
As a result, Fastmarkets’ weekly assessment of the green steel domestic, flat-rolled, differential to HRC index, exw Northern Europe, was €100-200 per tonne on December12, narrowing upward by €20 per tonne from €80-200 per tonne seven days earlier.
But the green steel premium in Northern Europe averaged €145 per tonne in November, compared to €200 per tonne in January this year.
According to industry sources, the lack of willingness to pay premiums for steel with reduced carbon emissions content was partially explained by the unfavorable economic situation in Europe.
EU Commission initiates review of EU Safeguard Measures on Steel Imports
European Commission has initiated a functional review of the EU Safeguard measures on steel imports. This decision follows a request from 13 EU Member States, who provided evidence pointing to a contraction in Union demand for steel and widening gaps between the current level of duty-free quota volumes and actual demand.
Additionally, the surge in China’s steel exports to major regions has intensified global trade flows, leading to increased steel exports from other markets into the EU.
The request calls for a reassessment of the allocation and management of the tariff-rate quotas. Notably, the Commission has indicated that the review process will be accelerated, with any adjustments to the current regime becoming applicable as of 1 April 2025.
Questionnaire for EU Steel Users: