European steel hollow sections market falls further on weak demand

The steel hollow sections market in Europe moved downward in the week ended Wednesday May 31, on weak end-user demand and an increasingly uncertain and gloomy economic situation in Europe.Fastmarkets’ weekly price assessment for steel sections (medium), domestic, delivered Northern Europe, was €930-960 ($994-1,026) per tonne on Wednesday, down by €5-20 per tonne from €935-980 per tonne a week earlier.

The corresponding weekly price assessment for steel sections (medium), domestic, delivered Southern Europe, was also €930-960 per tonne on Wednesday, down by €5-10 per tonne week on week from €935-970 per tonne.

Traders said that prices have been falling as a result of mills issuing lower offers to attract bookings, but that such moves have been largely unsuccessful.

“It’s not generating any more orders,” a source in Northern Europe said.

Market sources expected prices to flatten in the seasonally slow summer period due to annual maintenance closures, but they also expressed uncertainty about the state of Europe’s economy in the short to medium term.

Germany, the eurozone’s largest economy, slipped into recession in the first quarter of this year, according to the EU’s statistical office, Eurostat. The Northern European country’s economy contracted by 0.3% in the quarter, the latest statistics showed.

The economy of the eurozone, comprising those countries which use the euro as a common currency, grew by 0.1% in January-March, while the economy of the entire EU grew by 0.2%. Both had contracted by 0.1% in the previous quarter.

Germany’s housing sector has been hit particularly badly, weakening the demand for long steel products, sources said. The country’s Federal Statistical Office, Destatis, reported a 25.7% year-on-year drop in building permits for dwellings issued from January to March this year.

Destatis added in a statement on May 17 that “it is likely that the high costs of building materials and worsening financing conditions” would be major factors in the decline in building project numbers.

Meanwhile, hot-rolled coil feedstock prices in Europe fell in the assessment week, with the market subdued and a bearish outlook for trade in June.

Fastmarkets’ daily calculation of its steel hot-rolled coil index, domestic, exw Northern Europe, was €747.63 per tonne on Wednesday, down by €7.37 per tonne from €755.00 per tonne a week earlier.

Prices for HRC feedstock fell considerably in May, by €75.29 per tonne month on month.

Published by: Holly Chant

Lull persists in European CRC, HDG markets

Trading activity in Europe for cold-rolled and hot-dipped galvanized coil remained “frozen” in the week to Wednesday May 31, with buyers expecting prices to hit rock bottom in June, Fastmarkets heard.The spot market has remained quiet across Europe, with both mills and buyers continuing to hold back from trading.

“The level of stock at distributors, steel service centres is sufficient, while prices are declining, so nobody is restocking at the moment,” a source at a steel service centre in Germany said.

A widening gap between offers of domestic and overseas CRC and HDG, as well as limited end-user demand, has weighed on sentiment for June, sources said.

Most European mills, meanwhile, are expected to return with firm offers in June, once negotiations for long-term contracts with buyers in the automotive industry are finalized.

Buyers estimated that CRC was tradeable at €820-840 ($876-897) per tonne EXW and HDG at €850-870 per tonne EXW.

July-delivery Italian HDG was sold to Germany at €860-870 per tonne delivered during the assessment week.

A mill in Germany floated a price idea of €870 per tonne delivered – €850 per tonne EXW – for September-delivery CRC and around €890 per tonne delivered – €870 per tonne EXW – for HDG with the same lead time.

Sources also expect Tata Steel Netherlands to lift its force majeure, in place since February, on CRC deliveries and come back with fresh offers for September-delivery coil in June.

Fastmarkets’ weekly price assessment for steel CRC, domestic, exw Northern Europe was €840-850 per tonne on Wednesday, unchanged week on week.

The corresponding weekly price assessment for steel HDG, domestic, exw Northern Europe was €860-870 per tonne on Wednesday, down by €10 per tonne from €870-880 per tonne seven days earlier.

Import prices, meanwhile, dipped during the week. Most sources suggested that the downtrend in imports was expected to stop soon because current price levels were already around the cost line for most Asian mills where many of these shipments originate.

CRC from Taiwan and Japan for shipment in end-July or August was offered to Antwerp at €690-695 per tonne CFR.

A booking of South Korean CRC was reported during the assessment week around €710 per tonne CFR Southern Europe.

The supplier from South Korea has withdrawn its offers for the week from May 30. It is expected to return with lower prices, sources said.

An offer of 0.5mm Z100 HDG from Vietnam was reported at $850 per tonne CFR Southern Europe, for shipment in August.

Published by: Julia Bolotova

Bearish sentiment inhibits trading in Northern European rebar market

Weak consumption and a wait-and-see attitude among buyers resulted in flat markets for steel rebar and wire rod in Northern Europe in the week ended Wednesday May 31. Production stoppages could create resistance to a further downtrend in rebar and wire rod prices, sources said.

Fastmarkets’ weekly price assessment for steel reinforcing bar (rebar), domestic, delivered Northern Europe, was €640-650 ($684-694) per tonne on Wednesday, down by €10 per tonne from €650-660 per tonne last week.

Slow demand and persistently pessimistic sentiment resulted in minimal activity in the region’s rebar market.

Mills remained resistant to reducing their prices any further because the current downtrend has brought mills close to the cost line, Fastmarkets heard. And buyers were unwilling to commit to orders, forecasting further price drops.

“The market is weak, and demand is very depressed. I could see prices dropping further, regardless of production cuts,” a trader source said. “Few bookings are being made, and everyone is in wait-and-see mode.”

The corresponding weekly price assessment for steel wire rod (mesh quality), domestic, delivered Northern Europe, was €630-640 per tonne on Wednesday, down by €10 per tonne from €640-650 per tonne last week.

Weak end-user consumption has depressed economic conditions globally, and uncertainty about future demand resulted in weak trading in the wire rod market.

Customers opted for hand-to-mouth bookings, forecasting future declines in prices, sources said. And mills were resistant to offering lower prices, given their already narrow margins.

Published by: India-Inés Levy

Low demand likely to drive EU HRC prices down further

Domestic prices for hot-rolled coil in Europe were expected to move down due to slow trading activity and competitive import offers, sources told S&P Global Commodity Insights June 1.

Platts assessed domestic prices in Northwest Europe down by Eur5/mt day on day to Eur725/mt ex-works Ruhr June 1.

German mills have been offering HRC at Eur740-750/mt delivered, making it an equivalent of Eur720-730/mt ex-works Ruhr, according to estimations of market sources.

Tradable values have been heard at Eur700-740/mt ex-works Ruhr.

“There are enough offers from both Central Europe and Italy that are cheaper, even with delivery to Germany,” a Northwest European service center source said. “So German mills will have to accept lower prices as there is no demand.”

A majority of distributors have sufficient stocks of material and have been booking only minor volumes of coil of the specifications they needed. Some sources, however, said distributors will need to restock the material soon ahead of the summer slowdown.

“Both German and Italian mills had to come back to reality from the fantasy world they existed in and had to decrease the prices,” an Italian trader said. “And I do not think that they have reached the bottom yet.”

Platts assessed domestic prices for hot-rolled coil in South Europe at Eur680/mt ex-works Italy June 1, unchanged day on day.

Deals and offers have been reported at Eur680-690/mt ex-works Italy, and tradable values at Eur670-680/mt ex-works Italy. Bids have been heard at Eur650-670/mt ex-works Italy.

Platts assessed prices for imported hot-rolled coil in the region at Eur590/mt CIF Italy June 1, stable day on day. The assessment was based on offers heard at Eur580-605/mt CIF Italy for the material from Asia.

Platts assessed prices for imported hot-rolled coil in Northwest Europe stable on day at Eur600/mt CIF Antwerp June 1, reflecting offers heard in the market.

Author Maria Tanatar

German steel prices, output to decline in June; inventories stable

The June index for price direction sentiment stood at 26.65, about a 5-point reduction from May. Producers were more bearish than distributors, although less so than in May, scoring 20 points on the scale, an increase from the previous month’s index of 12.50.

Distributors recorded 33.33 on price expectations.

The market has moved down in recent days, with North European flat steel mills previously withholding offers after a spate of production problems and demand woes over the last months.

Indeed, German steelmakers have returned to the market, lowering offer levels to around Eur720-730/mt ex-works Ruhr to better match demand levels. Previous conversations in the market suggested that mills would not return until late June with new offers, competing with imports for September delivery on flat products.

As such, inventory expectations were largely stable on average, recorded at 49.17 points on the average inventory index. Producers were more pessimistic at 40 points, indicating a slight reduction in market stock levels, while distributor sources expected a month-on-month increase, scoring 58.33 on the inventory scale.

This broadly corresponds to the recent character of distributor purchasing, largely back-to-back without substantive stockpiling. As indicated on the pricing index, the market still perceives the opportunity for prices to fall further, and so distributors are resistant to building inventories.

“There is no demand,” said a long steel trader. “Mills are reducing capacity as the balance between supply and demand is off.”

Production sentiments were also generally negative, with the average production index at 35.84 for June. Distributors scored 41.67, while producers were more negative at 30 points, scoring even lower than the May score of 37.50.

This suggests that producers do not yet deem the market supportive of increased capacities, with equipment problems and poor demand bringing down production levels from fourth-quarter 2022 to Q3 2023.

“We cannot work for these price levels, mills are not running at full capacity,” said a long steel mill source. “Buyers are waiting for more stability in [the] price level. The whole value chain is in wait-and-see mode,” said a long steel mill source.

Platts is part of S&P Global Commodity Insights.

Author Benjamin Steven, Laura Varriale