The main driver of rising HRC prices in Europe was the lack of supply, both domestically and from imports, sources said.
But despite the still-weak consumption, the mood in the flat steel market was becoming more optimistic, with local producers actively pushing for price increases.
In Italy, local mills were asking for €670-680 ($730-741) per tonne delivered (equivalent to about €655-665 per tonne ex-works) for HRC to be delivered in January or February.
Sources confirmed that several deals have already been agreed at the new prices this week.
“Increases have been paid so far, because buyers do not have much option,” a trading source in Italy said.
“Importing was [previously] an alternative, but not anymore — [mainly because] lead times are too long and because safeguards make it even more complicated. And in Europe, mills have trimmed [their output], so [HRC] prices are rising regardless of the slow consumption.”
In Southern Europe, Fastmarkets calculated its daily steel hot-rolled coil index, domestic, exw Italy, at €659.38 per tonne on November 23, up by €20.00 per tonne from €639.38 per tonne the previous day.
The index was up by €26.05 per tonne week on week and by €56.88 per tonne month on month.
Import offers from Asia came in at around €620-640 per tonne CFR, for January-February shipment, sources told Fastmarkets.
Market participants agreed that imports from Asia were “totally not possible” because of rising prices and complications with customs clearance arising from the EU’s import safeguards.
“If you book something today from, say, Vietnam, it will arrive at the end of March,” a buyer source in Italy said.
“The new [quarterly EU import] quota period starts on April 1, but it is highly unlikely that it will be possible to squeeze those volumes into the second-quarter allocation, so there is a chance you would have to wait until July 1 for customs to clear that cargo,” the buyer source added. “That’s an impossible risk.”
Sources indicated that European ports still have quite significant tonnages of imported coil that did not fit the allocation to be customs-cleared in the first quarter of 2023, so they expect the “other countries” allocation for the first quarter of 2024 to be quickly filled with this material.
Offers of December-shipment HRC from Turkey were heard at €660 per tonne CFR, including the anti-dumping duty.
And sales of India-origin HRC to Italy were heard at €640 per tonne CFR last week.
In Northern Europe, meanwhile, trading was slower than in Italy, but higher prices have been achieved in deals for HRC, with lead times of six to eight weeks.
Sales of limited tonnages were heard at €650-670 per tonne ex-works in the region, with offers reported at €680-700 per tonne ex-works.
Italy-origin coil with lead times in January was offered to Germany at €680-770 per tonne delivered.
Fastmarkets calculated its daily steel hot-rolled coil index, domestic, exw Northern Europe, at €665.21 per tonne on November 23, up by €5.46 per tonne compared with €659.75 per tonne on November 22.
The index was up by €9.54 per tonne week on week and by €55.21 per tonne month on month.
The recent upturn in demand was mainly due to restocking in the region.
“Distributors and steel service centers are sending in specifications because they have to restock,” a steel service center in the region said. “The increased activity is not economy-driven, but more out of fear of higher prices and longer lead times from domestic mills due to capacity reductions.”
A new round of price rises by European mills was expected to be announced before the seasonal Christmas break, several market sources said, with new offers “likely to be above €700 per tonne ex-works.”
“Mills are negotiating €750 [per tonne] for first-half 2024 contracts with end users,” a distributor in Northern Europe said, “so they are trying to bring spot prices into line with this.”
Published by: Julia Bolotova
They said that offers for beams had increased by around €30 ($33) per tonne in the week to Wednesday, up to about €750-770 per tonne.
But buyers were unwilling to book at higher levels due to falling end-user sales prices.
Fastmarkets’ weekly price assessment for steel beams, domestic, delivered Northern Europe was unchanged at €730-750 ($795-817) per tonne on Wednesday.
Similarly, Fastmarkets’ weekly price assessment for steel beams, domestic, delivered Southern Europe was static at €730-750 per tonne on Wednesday.
“There’s no buyer appetite for higher prices in the market,” one trader said.
But production cuts at one major mill and some other producers, mean that supplies in Europe are gradually reducing.
Trading was slow over the past seven days and scrap feedstock costs in Turkey’s bellwether market have continued to climb.
Fastmarkets’ calculation of its daily index for steel scrap HMS 1&2 (80:20 mix) North Europe origin, cfr Turkey was $384.24 per tonne on Wednesday, up $5.31 per tonne week on week from $378.93 per tonne, and up by $36.59 per tonne month on month.
Published by: Holly Chant
Fastmarkets’ weekly price assessment for steel sections (medium), domestic, delivered Northern Europe, was €750-800 ($817-872) per tonne on Wednesday, unchanged from a week earlier.
Similarly, Fastmarkets’ weekly price assessment for steel sections (medium), domestic, delivered Southern Europe, was €750-800 per tonne on Wednesday, also unchanged from a week earlier.
Fastmarkets heard offers at €810 per tonne in the past seven days, but traders said that buyers would resist upward moves in the market due to slow consumption by the construction sector.
“Nobody at the end of the year is willing to pay a higher price because steel prices for end-users are still dropping,” one trader in Northern Europe said.
But HRC feedstock prices have risen considerably over the past month, and HRC traders said that the upward market move was “entirely cost-driven” and supported by reduced levels of suppliy.
They added that price rises may not be sustainable without increased end-user demand.
Fastmarkets’ daily calculation of its steel hot-rolled coil index, domestic, exw Northern Europe, was €659.75 per tonne on Wednesday, up by €5.62 per tonne from €654.13 per tonne a week earlier, and up by €46.62 per tonne month on month.
Higher sections prices were heard in Eastern and Southeastern Europe, with market prices on a theoretical weight basis at €720 per tonne CPT in Romania and €750 per tonne CPT in Poland.
In early November, Fastmarkets heard that sections prices in Romania and Poland were in the range of €700-720 per tonne CPT, on a theoretical weight basis.
A producer source in Southeastern Europe said that demand in the region was stable, adding: “I think the [price] growth was possible due to HRC price growth.”
Published by: Holly Chant
Throughput of conventional breakbulk at the Port of Antwerp-Bruges in the first nine months of the year came to 7.8 million tonnes. Steel, which comprises the vast majority of this segment, and is handled mainly from Antwerp, dropped by 17.6% compared with the corresponding 2022 period, Kallanish learns from the port operator company.
Still, the company states that conventional breakbulk is holding up relatively well despite the weak economic climate, with throughput volumes in line with the pre-Covid period. It points out that 2022 was marked by a strong post-Covid recovery.
The dry bulk segment fell by 14.6% to 11.2mt, with throughput of fertilisers, the largest product group within the segment, down by 24.2% after nine months. Compared to the peak in 2022, coal throughput declined by 36%. By contrast, throughput of sand and gravel grew by 7.4%. Volumes of iron ore fell by as much as 70%, scrap by 5%, and non-ferrous ores by 2%.
The total throughput of Port of Antwerp-Bruges including liquid bulk and containers was 204.4mt, a drop of 6% compared to the same period last year.
Jacques Vandermeiren, chief executive of Port of Antwerp-Bruges, notes that the port’s throughput is falling by less than the average in the ports of the Hamburg-Le Havre range. “We are gaining market share, but we will have to face the fact that 2023 will not be a top year,” he says.
Christian Koehl Germany
SSAB has concluded change negotiations at its Raahe plant in Finland after identifying solutions that can cut fixed costs by €10 million ($11m) annually without reducing the workforce, the steelmaker says.
Negotiations started in September primarily due to continued weak demand (see Kallanish passim). The solutions found include, for example, the development of working practices, job rotation and increasing multi-skills.
“Together we were able to add solutions to increase flexibility, mobility and versatility in the organisation, for example, which is what we set out to pursue. The outcome of the change negotiations will also help us with preparations to switch to fossil-free steel production,” says Raahe site manager Jarkko Matkala.
The change negotiations affected approximately 2,400 people. In total, SSAB employs around 4,700 people in Finland.
Adam Smith Poland
French green hydrogen producer Lhyfe estimates a renewables hydrogen-based DRI-EAF steelmaking process would cut CO2 emissions by 75-100% versus the blast furnace route, employing 54kg of green hydrogen/tonne of finished steel.
The hydrogen producer is in talks with steelmakers in Europe for possible collaborations and hydrogen production plant development (see Kallanish passim). A DRI plant would require a 700 megawatts electrolyser capacity, with on-site hydrogen supply the best option to avoid transport and storage costs.
Replacing natural gas or other fossil fuels with green hydrogen to power a re-heating furnace in a rolling mill requires 5-12kg of green H2 per tonne of rolled steel, and a 100MW electrolyser capacity, says Lhyfe industry division head Frederic Naudi. The reduction in CO2 emissions depends on the chosen composition of fuel for the furnace, whether it is a H2 blend with natural gas or pure hydrogen.
A typical heat treatment furnace requires approximately 100-200kg per dosage of H2 for controlled atmosphere. The hydrogen supply in this case is possible using Iso-tube Trailers which would transport 500-1,000kg of H2 per delivery. This entails a CO2 reduction of approximately 90%, Naudi says.
Lhyfe is working on the challenge of scaling up hydrogen production to feed the steel and other hard-to-abate sectors and is collaborating with electrolyser manufacturers to build “mega units”, larger equipment capable of guaranteeing industry supply. The European Hydrogen Backbone (EHB) initiative will create a hydrogen network of 53,000km across Europe by 2040 based on using 60% of repurposed natural gas pipelines and 40% new pipeline stretches. This will fast-track hydrogen supply, another source close to the company says.
Lhyfe is boosting renewable energy supply security, focusing on 100% renewables power. In 2021, it launched its renewable H2 production floating platform demonstrator called Sealhyfe, powered by an offshore wind farm in Saint-Nazaire, France.
In the first six-month trial phase, Sealhyfe produced green hydrogen at quay in the port of Saint-Nazaire before being moved off the coast of Le Croisic for a period of 12 months. Once off-shore, SeaLhyfe was connected to a floating wind turbine less than a kilometre away. Lhyfe decided for offshore production thanks to the powerful, constant and abundant renewable energy provided by large wind farms.
Aiming to be one of the leaders in green hydrogen production in Europe, the company is targeting a total installed capacity of 55MW in 2024, 200MW in 2026 and over 3 gigawatts by 2030.
Natalia Capra France
UK Chancellor of the Exchequer Jeremy Hunt missed a major opportunity by not confirming a Carbon Border Adjustment Mechanism (CBAM) in his Autumn Statement this week, says trade association UK Steel.
“The country is now in danger of playing catch-up with the EU on timetables, leaving a critical, trade-exposed industry at risk,” the association observes.
A UK CBAM would ensure that imported steel pays the same carbon costs as UK steelmakers. This will prevent deindustrialisation – or carbon leakage – where high carbon costs and climate change regulations are placed on domestic producers, but not foreign producers which then export high-emission steel to the UK.
The EU will implement its own CBAM in full from 2026. Without confirming a UK CBAM, high-emission steel currently exported to the EU could be diverted to the UK, which may “completely drown” the UK steel market, UK Steel warns.
“Lack of clarity and mutual recognition between the UK and European Union CBAM policies and Emission Trading Schemes could mean new trade restrictions,” it continues. “75% of the UK steel industry’s exports – totalling 2.55 million tonnes of steel (£3.5 billion in value) – goes to European markets. Without mutual recognition and linked emission trading schemes, UK-made steel will face a financial trade barrier when trading with its biggest export market from 2026.”
In a statement sent to Kallanish, UK Steel director general Gareth Stace says: “As UK steelmakers are announcing plans for green steelmaking, a UK CBAM will be essential to these investments, making sure that low-emission, green, UK-made steel is not undercut by high-emission, imported steel, which has not faced carbon costs.”
Adam Smith Poland
The Spanish rebar market has seen a price recovery, although selling values remain weaker than those observed in the last week of October. Demand for long products continues to stagnate and construction activity is unlikely to rebound before the end of the year, Kallanish understands.
“Demand growth at the beginning of November did not materialise in the way that was expected,” a market participant comments. “The steel consumption chain misinterpreted the movement observed in private construction. Activity increased mainly due to the need to avoid payments for delays amid more expensive materials, rather than due to stable demand.”
“Spanish producers are not expected to increase production or shipments before the newly elected government announces its priorities,” a local trader observes. “Meanwhile, the construction sector in Spain believes it will soon be able to recover its normal activity with the release of public investment in large infrastructure, although the long process of government formation following the general elections in July has impacted the industry.”
Rebar suppliers say they are offering 16mm material at €327-337/tonne base. Including €262/t size extras and €23/t loading expenses, transaction values are at €612-622/t ($668-679) ex-works. Some offers have also been heard at €625/t delivered for 16mm rebar. Despite the recent price rebound, this level remains almost €25/t lower compared to the end of October.
Meanwhile, the price of 6mm mesh with 150x150mm dimensions stands at €171/square meter delivered, down €8 on-month. The other largely sold quality, 8mm, is offered at €302/m2 on the same basis, a decline of almost €6/t compared to the third week of last month.
The monthly index for Spanish domestic rebar prices (B-500 SD 12 meter/12mm) increased slightly in November compared to that in the previous month, according to data published by the Spanish Chamber of Commerce. The index stood at 166.40, up 0.96% over October. However, it was 14.37% weaker year-on-year. The index is based on a value of 100 in 2014.
Todor Kirkov Bulgaria
The company said in a statement Nov. 22 that it has decided to adjust coke production to the difficult economic conditions at its ArcelorMittal Poland division, preparing to put the coke oven battery in Krakow on standby.
The decision is largely down to low coke demand, which is set to decline by 36% this year, according to company estimates. But it has also been triggered by coke’s falling premium to coking coal, which ArcelorMittal Poland said no longer justifies in-house conversion.
“The demand for coke has dropped significantly, but we are also dealing with an unprecedented situation — the price of coking coal fluctuates around the price of coke, which makes production unprofitable,” ArcelorMittal Poland CEO Wojciech Koszuta said in the statement.
The Krakow battery provides only a small part of the company’s coke production in Poland though. The majority of its coke supply comes from its plant in Zdzieszowice, which continues to run as normal, with all six batteries in operation, a spokesperson for ArcelorMittal Poland said. With its 4.2 million mt/year maximal capacity, Zdzieszowice is the largest coke plant in the EU.
Previously, ArcelorMittal Poland said it stopped production at its Sosnowiec wire rod mill due to a lack of demand.
January-October saw an 8.8% year on year decline in the EU-27’s crude steel production to 106.8 million mt, according to worldsteel’s Nov. 22 report.
The weak market conditions have also forced ArcelorMittal to temporarily halt production at its 1 million mt/year ArcelorMittal Zenica steel mill in Bosnia, the spokesperson confirmed to S&P Global Commodity Insights Nov. 22.
ArcelorMittal Zenica is equipped with one blast furnace and one basic oxygen furnace, as well as two rolling mills to manufacture wire rod and rebar. But it has idled its blast furnace and production is being gradually suspended in the other facilities, with the rolling mills already halted too.
The Bosnian plant is not expected to resume normal production until demand recovers to a level that would allow the business to operate sustainably, it said.
The downturn in EU apparent steel consumption began in the second quarter of 2022 with the conflict in Ukraine, unprecedented rises in energy prices, production costs and inflation. However, it has worsened in the second half of 2023, with the negative cycle fueled by ongoing economic uncertainty, according to ArcelorMittal Zenica.
Since 2021, coking coal prices have gone up by 300%, the price of electricity has increased by 44% and that of natural gas by 80%. At the same time, rail transportation costs have jumped by 25%, the company said, adding that, in the last three years, it has had to lift workers’ wages by 32% because of inflation.
The Bosnian mill has also been affected by a deterioration in iron ore quality, entailing more spending on additional volumes.
ArcelorMittal has not specified the proportion of its installed steel capacity in Europe that has been halted, but it has confirmed that it has temporarily idled blast furnaces No. 2 and No. 3 at its Bremen site in Germany, and blast furnace A at its plant in Ghent, Belgium. It also said it is planning to close a furnace at its Fos-sur-Mer site in France.
Earlier this month, ArcelorMittal said that its steel production in Europe in January-September fell by 11% or by 2.7 million mt on the year to 22.2 million mt and that since the beginning of Q3 the spread between European spot prices of hot-rolled steel coil and raw materials costs had fallen to unsustainable levels moving lower than seen over several quarters in 2019-2020.
Trade association UK Steel found it “disappointing” that contrary to what the industry expected, UK Chancellor Jeremy Hunt did not set forth a UK Carbon Border Adjustment Mechanism and a timetable to implement it by 2026 in the UK Autumn Statement Nov. 22.
The statement, one of two yearly in which the UK government lays out its economic and tax plans, only confirmed that the government “has undertaken extensive consultation on possible measures to mitigate carbon leakage risk including introducing a carbon border adjustment mechanism and will publish its response shortly,” without mentioning a timeline.
“With over 90% of global steel production facing no carbon cost, it is only right to introduce a carbon border policy to create a level playing field on carbon pricing,” UK Steel Director General Gareth Stace said. “It is a missed opportunity not to set out the government’s plans for its own carbon border policy.”
Stace said the country is now in danger of falling behind the EU timetable, leaving a critical trade-exposed industry at risk.
“As UK steelmakers are announcing plans for green steelmaking, a UK CBAM will be essential to these investments, making sure that low-emission, green, UK-made steel is not undercut by high-emission imported steel, which has not faced carbon costs,” he said. “Delaying the confirmation of a UK carbon border policy will risk the UK playing catch-up with the EU on timetables.”
A UK CBAM would create a level playing field on carbon pricing, ensuring that imported steel pays the same carbon costs as UK steelmakers, and it is key to prevent carbon leakage.
The European Union plans to implement its CBAM policy by 2026, and the UK steel association was pushing to have a similar one mirroring the EC one because “without its own one, the high-emission steel currently exported to the EU could be diverted to the UK,” the association said.
Also, according to UK Steel, “the lack of clarity and mutual recognition between the UK and European Union CBAM policies and Emission Trading Schemes could mean new trade restrictions.”
UK producers will need to comply with the EU CBAM regulation, resulting in a trade barrier to the country’s biggest export market. In 2022, the UK exported 3,399,485 mt of steel, of which 2,550,312 mt went to EU member states, constituting three-quarters of exports.
The UK produces 6 million mt of crude steel a year, around 70% of the UK’s annual requirement. Together with the EU, Canada and New Zealand, it applies comparable carbon pricing (GBP30-70/tCO2e), responsible for 155 million mt of steel, or 8.2% of global steel production in 2022, UK Steel data showed.