European coil demand remains subdued, with major buyers continuing to adopt a wait-and-see approach, steel processors confirmed at the Blechexpo trade fair in Stuttgart on Wednesday, attended by Kallanish.
Both producers and processors noted that market indexes are lagging behind current values, with the previously available €580/tonne ($678/t) base delivered level for hot rolled coil no longer achievable. “Buyers have purchased very little lately so prices were not clearly available,” a steel processor commented. Sources reported current HRC prices at around €600/t base delivered, with slightly lower figures for some volumes.
However, trading activity remains limited, and European ports are now receiving the material purchased from Asia during the summer. In anticipation of CBAM and new safeguard measures, several buyers confirm having secured substantial tonnages from the import market for delivery before year-end. Many opted to build stockpiles to limit exposure to higher European prices.
European producers are currently seeing prices recover, though the increase remains gradual and based on sales of relatively low volumes. To see volumes recover, “they [mills] will have to hold [prices] firm for at least another month,” another steel processor comments.
Values are gaining traction and the general sentiment at the trade show was positive. Steel processors, including service centres and re-rollers, confirmed that derivative prices are rising. However, forecasts suggest a slower recovery than producers would prefer. While some steelmakers are refraining from quoting for first-quarter delivery, others are offering HRC at around €650/t base delivered for January.
According to several steel processors at the event, this level is “overly ambitious” compared with sheet, strip, and tube prices downstream, which are expected to continue increasing but moderately. The “gradual” and “moderate” nature of the recovery reflects the reality that downstream demand is not driving current price gains and is likely to remain subdued in the coming months.
CBAM and the new safeguard measure are generating significant confusion in the market. Multiple sources called it “a mess”, noting that estimated CBAM costs could be anything between €20 and 200/t.
An international trading company reported shifting its focus away from commodity products to concentrate on niche, high value-added materials. A larger trader, however, admitted that moving away from the traditional commodity coil business model is not feasible, as volume sales remain essential for survival.
Many customers are reportedly asking traders to absorb CBAM related costs, a request often refused. However, in some cases, “we are taking risks”, a trading source conceded.
Several service centres are also facing steep duties on hot-dipped galvanised coil imports. One importer, previously reluctant to clear material through customs, was obliged to do so and pay the safeguard duty, to avoid paying CBAM charges in January.
HRC and other coil prices are expected to continue rising gradually but inevitably, according to unanimous opinion across the trade show. A German source said mills would not release any more volumes of HRC in Q4 for less than €600/t ex-works. It was suggested by some market participants last week that some residual volumes were still available for less, but that option seems to be exhausted now. He sees €600 as being a psychological mark that will not be undercut.
Natalia Capra France
