Some European steelmakers introduced offer increases of Eur5/mt to Eur20/mt in the week started Oct. 16 to prevent further price declines and due to high production costs. The move saw a mixed response from buyers. Some said that demand would remain low, and a price rise would be impossible without additional production cuts. Some others said restocking, the need to cover costs and a lack of competitive imports would drive prices higher.
Demand was a concern due to weak steel consumption from end-users and distributors avoiding restocking because of sufficient stocks.
“Demand remains the biggest issue, prices have been declining despite big production cuts,” a trader said. “Every steelmaker did something to reduce production. And some mills discussing further stoppages. But in the current economic situation demand is unlikely to improve soon.”
Germany’s ArcelorMittal temporarily idled blast furnaces No. 2 and No. 3 at its Bremen site Oct. 1. ArcelorMittal has also shut blast furnace A at its steel plant in Ghent, Belgium, and was planning to close a furnace at its Fos-sur-Mer site in France. Blast furnaces at the Salzgitter plant in Germany and Tata Steel in the Netherlands have also remained idled for maintenance.
“I do not see any possibility to move prices up, as stocks [of distributors] are still high and end-user demand low,” a German service center said. “Mills offer late November-December rolling coil, so they do not have full order books.”
Market participants said while distributor stocks were high, buyers would need to restock for the first quarter.
“It seems that stocks are not as high as buyers claim,” a distributor said. “They need to buy, and they will return to the market soon looking for some volumes. It is clear that coil prices are already at the bottom. The mills stopped giving discounts, so the lowest prices are gone.”
In the first half of October, European mills were offering discounts to fill production lines for the fourth quarter. But in the middle of the month steelmakers shunned low prices and pushed offers higher.
Production cuts have been sufficient to support domestic prices, some market sources said.
A lack of competitive import offers and long lead times for overseas material made buyers to turn to domestic suppliers.
“Mills’ order books are not good, but they are also not tragic,” an Italian market source said. “Mills will no longer accept lower prices; they need to cover costs. And they will see buyers booking domestic coil instead of import.”
Platts assessed domestic HRC prices in Northwest Europe down Eur5/mt on the day at Eur610/mt ex-works Ruhr on Oct. 18.
Tradable values were heard in the Eur610-620/mt ex-works Ruhr range.
A limited number of deals not attainable from all mills were settled at Eur600/mt ex-works Ruhr. Offers were reported in the Eur610-640/mt ex-works NWE range.
Platts assessed domestic HRC prices in South Europe up Eur10/mt on the day at Eur600/mt ex-works Italy on Oct. 18.
Offers were heard at Eur620/mt ex-works Italy and tradable values at Eur600/mt ex-works Italy.
Import HRC offers from Vietnam were heard at Eur580/mt CIF Italy.
Author Maria Tanatar
Platts is part of S&P Global Commodity Insights.