ArcelorMittal increases offers for all coil products across Europe: sources

ArcelorMittal announced an increase in offers for all coil products across Europe Aug. 26, market sources told S&P Global Commodity Insights.

New offers for hot-rolled coil have been reported at Eur800/mt ex-works for October rolling and at Eur850/mt ex-works for November production coil.

The new October offers are about Eur100/mt above the latest transactions reported at Eur700/mt ex-works by various producers for German HRC.

Platts assessed hot-rolled coil in Northern Europe unchanged day on day at Eur700/mt ex-works Ruhr Aug. 25.

New offers for cold-rolled coil from ArcelorMittal were heard at Eur900/mt ex-works and Eur950/mt ex-works for October and November, respectively.

Offers of hot-dipped galvanized coil were reported at Eur930/mt ex-works for October and at Eur980/mt ex-works for November.

The price rise is needed in the European market to cover increasing energy and logistics costs, sources said. Current coil prices are apparently close to, or below, production costs. In addition, distributors have high inventories of expensive material purchased earlier this year.

Some market participants believe that the offer rise would help to settle the downwards trend in the EU market. However, a majority of the sources question the extent of a potential price recovery amid inventory-driven weak demand and low steel consumption of end users.

The market had mixed sentiment on potential increases.

“I think the offer increase will help the market recover a bit from its current state,” a trader said.

A pipe maker said that he hoped the “much needed increase will be possible” while others were more cautious.

“ArcelorMittal will try to get some price rise, but obviously they won’t be able to get the desired level, not in the current market,” a Northern European trader said.

A German distributor expressed similar sentiment, saying “sure prices are going up but I’m not fully convinced it will hold. At this point it’s a question of real consumption, if we run into recession then prices will see problems again.”

The distributor described strong extant margins between integrated mill costs and current sales levels and was skeptical that costs could truly rationalize price increases. “Eur800/mt is very ambitious in the current market, but not totally unrealistic. An announcement from a market leader will definitely have some effect but it depends how competitors follow. It could be a strategic [move] with tradable levels actually decreasing in the meantime,” the distributor added.

Another traded agreed, saying the announcement was a sales strategy to shift further volumes at current prices.

— Maria Tanatar, Benjamin Steven