European HRC market lacks clear direction; ‘wait-and-see’ sentiment prevails
Last week, a leading European steelmaker increased its offer price for November-delivery HRC to €590 ($647) per tonne ex-works or delivered, depending on the region, Fastmarkets reported.
On Monday, however, mills in Germany had not announced new higher offers, Fastmarkets understands.
“We are expecting some German mills to come back in the market with new prices this week,” a trader source based in Germany told Fastmarkets.
Some European producers and buyers are waiting for the Chinese Golden Week holiday (October 1-7) to come to an end before predicting the price developments in the global flat steel market, according to sources.
As a result, trading remained quiet on Monday.
One mill in Northern Europe was heard offering HRC at €550-560 per tonne ex-works, which was €20-25 per tonne higher than its previous offer, a buyer source told Fastmarkets.
According to the buyer, the previous offer levels could also be available for buyers, however.
Sources indicated the workable market level for HRC in Northern Europe at €530-550 per tonne ex-works.
A second buyer source told Fastmarkets that for larger tonnages even lower prices of €520-530 per tonne ex-works could be achieved.
Fastmarkets calculated its daily steel hot-rolled coil index domestic, exw Northern Europe at €538.08 per tonne on Monday, down by €2.75 per tonne from €540.83 per tonne on October 4.
The index was down by €3.59 per tonne week on week and by €42.67 per tonne month on month.
In Southern Europe, Fastmarkets’ daily steel hot-rolled coil index domestic, exw Italy was calculated at €540.00 per tonne on Monday, up by €5.00 per tonne from €535.00 per tonne on October 4.
The Italian index was up by just €1.00 per tonne week on week and down by €40.24 per tonne month on month.
Fastmarkets sources estimated the workable market level for HRC in Italy at €530-550 per tonne ex-works.
Some customers in Italy have indicated that they could accept a price level of €550 per tonne ex-works, but suppliers in Italy were asking for even higher prices, according to a third buyer source.
Regarding imports, trading also remained muted due to the Golden Week holiday in China. Most Asian suppliers have withdrawn their offers and are expected to return with new higher levels later this week.
Extreme protectionism to cause shortage if demand resumes: Assofermet
Potential EU anti-dumping duties on hot rolled coil from Japan, Vietnam, Egypt and India could result in a material shortage on the domestic market, according to a market note by Italian steel trade association Assofermet.
Paolo Sangoi, president of Assofermet’s distribution segment, warns that the competitiveness of Italian buyers and service centres is being impacted by the compromised opportunity to import coils from third countries, Kallanish notes.
Currently, the market is experiencing a period of stagnant consumption and low coil prices, with the distribution sector being the weakest element of the value chain due to low margins and profits.
Nevertheless, Sangoi contends that a material shortage may occur, potentially resembling the events of 2021 and 2022, if demand increases and consumption improves.
In the event of a resumption of consumption and the absence of imports, the shortage that has been observed in the past may resurface, resulting in significant challenges for buyers. Currently, EU steelmakers are reported to be open to negotiation.
The EU’s 15% import cap has already eliminated 1.6 million tonnes from the market for European buyers, Sangoi says.
Japan, Vietnam and Egypt have already been hit by the imposition of the 15% quota cap under the current EU safeguard measure without the need of further AD measures.
“The higher cost that importers will be forced to bear will inevitably be passed on to end customers, producers of components and finished steel products, undermining their already precarious level of competitiveness in international markets,” it says.
The consumption resumption is not anticipated to occur this year; however, the situation may begin to recover in the first quarter of 2025.
The price trend must change direction, as both producers and coil buyers have a genuine need for price increases throughout the entire value chain.
Nevertheless, this is impossible without a commitment to reduce output, according to Sangoi.
The EU initiated an anti-dumping investigation on imports of hot-rolled flat steel from Egypt, India, Japan, and Vietnam, according to the Official Journal of the European Union on 8 August.
The complaint was lodged on 24 June by the European Steel Association Eurofer.
The products under investigation include certain flat-rolled products of iron, non-alloy steel, or other alloy steel, including cut-to-length and narrow strip products, not beyond hot-rolled, clad, plated, or coated (see Kallanish 9 August).
The Chinese economic crisis has further exacerbated the lacklustre demand for service centres.
“Italy’s GDP remains positive; however, Germany’s stagnation is exceedingly concerning. The path of reducing the cost of money, which has been announced, does offer some optimism for the medium term, as it could potentially stimulate demand.”
According to Assofermet, the sales volume contraction in July was less severe than anticipated, with cold-rolled and coated products outperforming hot-rolled products.
However, August was adversely affected by the prolonged production shutdowns, which resulted in a decline in prices and the market was extremely weak in September with no real resumption after the summer break.
Natalia Capra France
UK Steel calls for additional protection from overcapacity
Industry association UK Steel is warning the domestic market could be exposed to excess capacity if existing safeguards were to lapse, Kallanish notes.
The Steel Trade Beyond 2026 report says that excess steel capacity worldwide, built due to non-market forces such as state subsidies, could cancel out UK investments if not tackled with new trade policies. Global steel excess capacity in 2023 was estimated at 543 million tonnes.
Steel demand in China is also weakening, and the country is expected to export 100mt this year, causing supply to spill over into other markets and dampen steel prices.
The average profitability of the steel sector is currently the lowest in a decade, according to the report, with producers in developed economies losing market share to underpriced imports.
The import share in the UK has jumped to 68% so far in 2024, from 60% in 2023 and 55% in 2022, with just 40% of the UK’s yearly demand requirements being fulfilled by domestic supply.
The association notes that while the UK government is investing seriously in building the UK steel industry, addressing excess capacity and fair competition should be a fundamental element of the upcoming Steel Strategy.
UK Steel director general Gareth Stace says: “A raft of distortive subsidies is leading to oversupply which is met with rising protectionism and trade diversion.”
The report adds that safeguards which have been shielding the UK sector from trade diversion, will have to expire in 2026 due to WTO rules, and action must be taken urgently ahead of existing protection lapsing in 21 months’ time.
There are fears that growing trade protectionism by other countries could result in trade flows being directed at markets left exposed, with the UK government now needing to go further than it has before. The US continues to add additional tariffs on Chinese imports, as has Canada.
It recommends the government explores trade policy options, including ones that make use of WTO exceptions, in the context of actions taken by other WTO members which could include tariff-rate quotas.
Additionally, it should seek to play an active role in international initiatives such as the Global Arrangement on Sustainable Steel and Aluminium currently being negotiated between the US and EU.
Other recommendations include reviewing the UK trade remedies framework to make it more accessible to industry, and strengthen carbon leakage and public procurement policies to counter the impact of excess capacity on UK producer market share.
Stace adds that excess capacity has the potential to redraw the map of global steelmaking as there is no longer fair competition.
The report also notes that capacity growth in Southeast Asia and the Middle East has been largely state-funded and for high-emission blast furnaces. Over two thirds of the steelmaking capacity is in countries that have net zero targets later than 2060 or none at all.
Carbon-intensive blast furnaces account for more than 74% of capacity additions in Asia, while 89% of blast furnace energy input globally comes from coal.
“Failing to tackle the issue head-on could see British steelmakers continue to lose market share and mean that investments in decarbonisation are all for naught. So far, steel safeguards have offered a necessary shield but their expiry in 2026 could see industry faced with a cliff edge,” Stace concludes.
Carrie Bone UK
Half of German fabricators need to reduce staff
Germany’s steel and metals fabricators’ federation warns of continued pessimism among companies amid the ongoing climate of slow growth, Kallanish notes.
In a recent poll by the federation on the business sentiment among its members, 41% of respondents said they plan to lay off personnel. This concerns mostly small and medium-sized enterprises (SMEs), many of them family-owned, with a large share of automotive suppliers.
Companies are suffering not only from low demand on the market but also from a high level of bureaucracy, which urgently needs to be cut back, says WSM managing director Christian Vietmeyer. One critical development underlined by WSM is the “unprecedented flexibility” in the call-offs of carmakers.
A similar picture has been drawn by credit insurer Atradius, which states revenues of steel and metal working companies dropped by 10% from January to April. According to Atradius, 32% of companies have introduced short working hours, which is way above the average for processing/manufacturing industries of 13%. Atradius also observes an increase in bankruptcies and fears that 10% of companies could disappear in the next five years.
SMEs are hit harder in times of recession, states Datev, an IT provider organised as a cooperative by and for tax consultants, auditors and lawyers. SMEs are mostly rooted regionally, and cannot easily translocate production sites to other countries. They also rely very much on established personnel that are loyal to the location, Datev notes.
Datev has carried out a study based on business figures submitted by several thousand companies across all sectors, which in future could work as an index for forecasts by economic research institutes. According to the study, revenue across all companies in August was 5% lower than in August 2023. “That’s what it really looks like; it is a view into the engine room,” says Datev chairman Robert Mayr.
Christian Koehl Germany
EUROFER calls for urgent trade actions to address Global Steel Overcapacity
The European Steel Association (EUROFER) is calling on countries involved in the Global Forum on Steel Excess Capacity (GFSEC) to take immediate and decisive trade measures in response to rising global steel overcapacity.
Newly released data from GFSEC indicate that this issue continues to worsen, putting thousands of jobs at risk and distorting the global steel market, especially in Europe.
EUROFER’s Director General, Axel Eggert, emphasized that market forces alone cannot resolve the overcapacity problem. He urged GFSEC countries to adopt a comprehensive strategy that includes unilateral trade actions, particularly targeting nations that have withdrawn from the forum or continue to export excess steel. “The open market approach only benefits countries with unchecked overcapacity. We need actions that cover the full range of steel products and address all affected countries,” said Eggert.
At today’s GFSEC Ministerial Meeting, it was projected that global steel overcapacity could reach 630 million metric tonnes by 2026, five times the EU’s crude steel production in 2023. This surplus threatens economies with open markets, particularly in the EU, and undermines efforts toward decarbonization and innovation, which are critical for the green transition.
Eggert stressed that European steelmakers are heavily investing in decarbonization, but these efforts are at risk due to the flood of underpriced, carbon-intensive steel entering the market. “We need emergency measures to address this issue and find a structural solution to its root causes,” he concluded.
Sidenor tests new electric combustion technology
Spanish special steelmaker Sidenor says it is testing innovative technologies, such as the application of electric resistance heating in the preheating process of tundishes, to lower carbon footprint, Kallanish learns from the company.
This is part of the Citadel project, financed by the EU’s Horizon 2020 research and innovation programme, which promotes transformation towards a more sustainable and carbon-free steel industry.
Several of Sidenor’s gas-fired heating processes are currently the focus of the testing. The initiative is centred on the electrification of processes which traditionally depend on natural gas, such as tundish and ladle heating, which are critical in the production of liquid steel and have a great impact on the final quality of the product.
“We are working to optimise these processes by developing two key industrial tests, tundish heating using electric resistances and ladle heating using oxy-fuel combustion,” Sidenor comments. “These tests aim to evaluate the feasibility of substituting natural gas with cleaner energy sources, thus reducing carbon emissions and improving energy efficiency at crucial production phases.”
The use of O2, as a by-product of H2, is expected to increase production efficiency and reduce CO2 emissions by around 30%. The technology will enable the transition to hydrogen combustion in the near future.
Todor Kirkov Bulgaria
GMH Gruppe acquires speciality steelmaker Kind & Co
Germany’s GMH Gruppe says it has acquired 100% of shares in another, smaller German steelmaker, Kind & Co. Edelstahlwerk.
Kind & Co specialises in the production and refinement of high-alloy steels and offers a wide range of tool steels and special alloys. It is based in Wiehl, North Rhine-Westphalia, and generated sales of around €125 million ($138m) in 2023, Kallanish notes.
The acquisition will strengthen GMH’s position in the tool steel industry, particularly in the segment of hot-work tool steels, in which Kind & Co holds an outstanding international position, according to GMH.
Kind & Co’s expertise in research and development will also support GMH Gruppe’s ongoing innovation efforts, the group adds.
“Since its foundation in 1888, Kind & Co has been family-owned, with the fourth generation in control since 2000,” says Susanne Wildner, managing director and, until the acquisition by GMH, shareholder of Kind & Co. “GMH Gruppe and Kind & Co share the same values and an owner-managed, entrepreneurial thinking and behaviour.”
Christian Koehl Germany
China, investment reluctance restrain European manufacturing recovery: ING
Easing inventories and interest rates, as well as strengthening consumer purchasing power in Europe present an opportunity for some manufacturing sector recovery in 2025, but multiple longer-lasting concerns will restrain growth, says ING Bank.
Consumer goods demand in Europe remains sluggish due to the inflation-induced income shock, while the economy is stuck in a low-growth environment and eurozone investment is well below its pre-pandemic level. Policy uncertainty plays a major role too, the bank points out.
Structurally, the energy shock is still keeping energy-intensive production muted, while weak demand outside of the eurozone is impacting new orders in the manufacturing sector. Local producers have, moreover, been hit by competition from Chinese export growth to the eurozone.
Although there was a sharp inventory reduction in the first and second quarters, this comes on the back of far greater increases in the years before. Before the summer, the destocking seemed to coincide with an increase in new orders but since then, overall order books have been deteriorating, ING observes.
There are nevertheless questions over whether inventories need to decline before production picks up like in previous years. Due to supply chain disruption and geopolitical turmoil in recent years, the “just in time” model may be replaced by the “just in case” model, where companies hold onto larger inventories to be less vulnerable to supply chain shocks. The typical inventory cycle may not apply in the current uncertain climate of globalised production.
The green shoots of recovery in Europe are complicated by the expected soft landing in the US economy and continued growth problems in China, which should keep foreign demand suppressed. “Add to this the ongoing structural worries with investment reluctance and policy uncertainty, and it is almost impossible to see a vigorous rebound of eurozone industry,” ING says in a note sent to Kallanish.
The changing growth model in China is adding to European industry structural decline concerns, with soaring Chinese exports putting pressure on certain industrial sectors such as automotive. Higher energy price volatility, meanwhile, could limit the recovery in energy-intensive sectors, while skilled labour shortages remain a concern as the workforce ages.
“There is light at the end of the tunnel, but it is very faint right now,” ING concludes.
Adam Smith Poland
Italian rebar activity stagnates with low prices
Italian rebar prices are mostly stable on-week although the low point of the range has decreased €10/t ($11) compared to the end of September, buyers tell Kallanish.
Last month, producers’ efforts to implement a price increase have not produced the desired effect, and activity is considered too slow to achieve the hikes.
Buyers and distributors anticipate a further price decline in the upcoming weeks, in line with scrap prices, also seen decreasing this month.
Current transaction values in the domestic market are at approximately €280-300/t base ex-works. Two buyers report purchasing limited volumes.
Including additional size extras at an average cost of €260/t, current values in Italy hover this week at €540-560/t ex-works.
The current price for domestic mesh stands at approximately €390-400/t, not accounting for transport costs. An extra fee of €300/t applies for size extras, sources suggest.
Natalia Capra France
European HRC prices remain largely flat despite bullish sentiment at producers
Fastmarkets calculated its daily steel HRC index, domestic, exw Northern Europe at €540.83 ($596.68) per tonne on Friday, down by €1.67 per tonne from €542.50 per tonne the previous day.
The index was down by €4.38 per tonne week on week and by €49.17 per tonne month on month.
Trading remained quiet in the region. Buyers questioned the recent price increase announced by a leading European producer earlier in the week.
“The market cannot accept [€590 per tonne as a base price for HRC]. Demand is not strong enough to support that rise,” one buyer source told Fastmarkets. “But it was clear that prices [for HRC] have fallen below costs for European mills.”
Buyers estimated tradeable values at €520-540 per tonne ex-works on Friday.
One buyer estimated achievable prices in the range of €510-520 per tonne ex-works, but market sources said that mills were unlikely to accept such low prices.
One integrated steelmaker in the Benelux area was offering HRC at €540 per tonne ex-works, but trade sources said that the mill was also considering a price rise, following the move by a market leader.
Market sentiment would become clearer in the week starting October 7, industry sources said, when public holidays in Germany and in Asian countries were at an end.
“I think, price-wise, we are currently at rock bottom in Europe,” a second buyer said.
“It is clear that [EU mills] will still accept lower prices for fourth-quarter-delivery HRC,” a third buyer said. “The price increase from [the leading European producer] helps to stabilize the market, but [I am] not so sure about actual price rises when demand is so low.”
In Southern Europe, Fastmarkets’ daily steel HRC index, domestic, exw Italy was €535.00 per tonne on Friday, unchanged from the previous day.
The Italian index was down by €6.67 per tonne week on week and by €55.00 per tonne month on month.
Buyer estimates for the workable market price were €520-540 per tonne ex-works, while the majority of sources estimated the market at €530-540 per tonne ex-works on Friday.
One integrated Italian supplier withdrew its offers from the market earlier this week and was expected to come back with new prices.
“After [the European producer’s] price rise this week, other producers also withdrew offers and [were now planning] price rises. We will see how the market reacts,” a buyer in Italy said.
As for imports, the markets have remained quiet due to public holidays in Asia. But market sources suggested that imports would remain uncompetitive in Europe because of trade restrictions, long lead times and the small gap to European prices.
“We do not have new offers from Asia, but China has become more bullish after a stimulus package was announced so we expect higher offers,” a second buyer said.