Category: Latest Updates

Apparent steel demand for flat steel products in Europe has been decreasing for months, but the bottom of the negative cycle is now in sight, according to a senior source at a major European flats supplier.

Mills are seeing apparent demand in Europe bottoming out and hope that a mild rebound will materialise in the coming weeks, as buyers prepare orders for the first quarter of 2023.

“Destocking aggressively intensified since mid-August among distributors and service centres in Europe,” the source confirms to Kallanish. “We expect a different approach in early Q4. All negative factors impacting the market have now been factored in; some positive signs from the demand side could be looming.”

In its latest outlook published in August, Eurofer indicated that apparent steel demand in Europe should move down 2.6% year-on-year in Q4, following falls of 4.3% and 5.9% in Q3 and Q2 respectively. A strong rebound of 6.2% is expected in Q1 2023.

“The negative sentiment in the market hit in September harder than expected, but now demand is bottoming out or even trending up,” the source adds. “Sentiment will also be lifted by the effect of production cuts at European mills, having a real impact on the market from October onwards.”

The source calculates that some 20% of European flat steel supply could have been temporarily idled in recent weeks and months. Other observers believe this percentage could go up as high as 24%.

Flats demand has suffered strongly from the ongoing weakness of the automotive sector in Europe. The source notes, however, that while automotive production in Europe has been running at low levels for some months now, there are some small encouraging signs coming from steel shipments and demand from OEMs.

According to the latest figures issued by ACEA, new European car registrations in August marked the first positive y-o-y monthly growth (+4.4%) since Q3 2021.

Emanuele Norsa Italy

Spanish special steelmaker Sidenor says it is halting production at the rolling mill at its Reinosa plant in northern Spain. The measure is effective from 26 September, Kallanish notes.

Last Friday, the company’s management held an extraordinary meeting with representatives of the workers’ council to inform them that 16 of the 138 workers on the production line will be affected by the decision. They will however be relocated to other facilities, without the need to apply the so-called temporary employment regulation – ERTE.

“The reason for the production cut is based on the soaring energy prices. Electricity has grown 153% since last year, while gas did so by 521%,” Sidenor says.

The rolling mill produces special steel bar for the automotive sector.

Todor Kirkov Bulgaria

The ambition of many industries, especially in the EU, to offer low-emission products could create new business connections between end users and steel producers.

Processor companies may increasingly seek relations with upstream steelmakers to make sure they get low-carbon steel and secure volumes they would normally receive from intermediate sources. “Quite a number of companies are coming knocking that we have not served before,” a source from a steelmaking company told Kallanish on the sidelines of the ecoMetals day in Düsseldorf last week.

The electric arc furnace mill uses most steel it makes for in-house rolling, but also releases a six-digit tonnage to the market, for example for further hot-rolling of billet and slab at other operations. Recently, it received requests from cold-roller companies as well, which is a relatively new twist. “On the EAF route, our steel comes with lower emissions than that from the blast furnace route, which is attractive to downstream companies that normally buy from our customers,” he says.

Cold-rollers of strip to a large extent serve automotive and other sophisticated industries, where low-emission products are gaining increasing relevance. This is partly because of OEMs’ own ambitions, partly for a greener image, and partly because their customers increasingly ask for it. As a consequence, processors are now trying to contract volumes from primary sources, before the product gets forwarded to the first rolling stage.

Christian Koehl Germany

Trading activity in the European hot-rolled coil market remained low on Sept. 26, while steelmakers and distributors showed different views on market fundamentals.

The mood among buyers has been strongly bearish due to high stocks of flat steel they had accumulated as a result of panic buying in the first half of the year following Russia’s attack on Ukraine. Additionally, weaker demand from end consumers added to the bearish mood, and a majority of buy-side sources believed that neither demand nor prices would recover in the short run.

Steelmakers, in the meantime, highlighted that the production cuts and furnaces stoppages across Europe were expected to have a strengthening effect on prices, resulting in more balance supply and demand. Market sources estimated that steelmakers capacities dropped about 20%-25%.

In addition, the automotive industry and some other end consumers have been showing some signs of demand recovery, steelmaker sources said.

“[The] Automotive industry in Germany is not kicking up, but in France and some other countries the demand from carmakers is good,” a Northern European producer said.

Platts assessed hot-rolled coil in Northwest Europe at Eur740/mt ex-works Ruhr on Sept. 24, up by Eur5 day on day.

A Northern European producer reported transactions for HRC done by German mills at Eur720-750/mt ex-works Ruhr.

A trader estimated tradable value at Eur740-750/mt ex-works Ruhr. Another trader said that although official offers from German mills have been as high as Eur800/mt ex-works Ruhr, prices of Eur730-760/mt ex-works were still achievable.

A Southern European producer reported offers at Eur800-820/mt delivered Germany, the equivalent of Eur740-770/mt ex-works Italy.

Platts assessed hot-rolled coil in southern Europe stable on day at Eur750/mt ex-works Italy Sept. 26. The assessment was based on achievable prices heard at Eur740-760/mt ex-works Italy and official offers reported at Eur780/mt ex-works Italy.

Platts is part of S&P Global Commodity Insights.

— Maria Tanatar

Arvedi, Italy’s largest flat steel producer, has restarted production at its mill in Cremona, northern Italy, after previously suspending output amid high raw materials costs and low demand, an executive close to the company told S&P Global Commodity Sept 26.

On Sept. 22, Arvedi restarted one electric arc furnace and and the other on Sept. 23, while one of its EAFs in Terni was still in a planned outage.

Arvedi’s two electric arc furnaces have capacities of 1.4 million mt/year of crude steel 2.6 million mt/year.

According to sources, it was not clear yet what Arvedi was planning to do in Cremona in October with the company still pondering the market but hoping to continue production.

A spokesperson declined to comment on output from Cremona’s EAFs but confirmed that one of the two EAFs at its plant in Terni was still not in operation.

The two EAFs in Terni have a combined capacity of around 1.1 million mt/year.

Steelmakers across Europe are cutting production to sustain prices in moves that steel end users hope will continue to rebalance demand and re-stabilize margins.

Platts assessed hot-rolled coil in southern Europe stable on day at Eur750/mt ($724/mt) ex-works Italy Sept. 23. The assessment was based on offers and achievable prices heard at Eur740-780/mt ex-works Italy.

— Annalisa Villa, Maria Tanatar

Sales by German steel stockholders and distributors increased marginally year on year in August, while stocks rose as economic uncertainty and high energy costs hurt activity in most end-user sectors.

Total sales of steel products were up 0.2% year on year and 6.1% month on month at 836,707 mt in August, data from German stockholders and distributors association BDS showed Sept. 26.

Flat product sales increased the most with volumes up at 499,825 mt in August, from 492,927 mt a year ago and 459,016 mt in July.

Long product sales rose to 277,854 mt in August, from 262,653 mt a year ago and 261,685 mt recorded in July.

High stocks

Stocks of all steel products in the German stockholding and distribution segment rose 5.1% year on year to 2.22 million mt in August but fell 2.2% month on month from July, when they reached 2.27 million mt, the highest since 2019.

Stocks of long products slipped to 782,198 mt in August, from 788,585 mt a year ago, while stocks of flat products rose to 1.40 million mt, from 1.30 million mt, over the same period.

Germany continued to produce lower crude steel volumes as steel output declined for six straight months in August, S&P Global Commodity Insights reported earlier. The output fell 2.3% year on year to 2.87 million mt in August as steelmakers temporarily cut production.

Hot-rolled coil prices in Northern Europe were at Eur850/mt ($842/mt) ex-works Ruhr at the beginning of August and closed at Eur780/mt base ex-works Aug. 31, according to S&P Global data. Platts, part of S&P Global, assessed hot-rolled coil in Northwest Europe at Eur735/mt ex-works Ruhr Sept. 23, unchanged day on day.

— Annalisa Villa

French rebar activity remains relatively weak, with slow demand from larger and smaller buyers. They continue to purchase small tonnages but at stable prices, sources tell Kallanish.

Domestic production is patchy with steelmakers alternating between stoppages and restarts each week. Production plans are changing according to daily supply of gas and electricity.

Sentiment however is gloomy throughout Europe. As sales activity has not properly restarted after the August maintenance stoppages, sellers and buyers are beginning to believe there will be a significant price and demand decline in October, and the market will go through a standoff. Uncertainty is causing weakness in the French construction sector, which continues to be plagued by high prices and slow private residential apartment sales.

Some sources reject the idea of a market deadlock in France. They believe the situation of demand and sales volumes will continue to be slow until the end of the year, with buyers purchasing some 1,000-2,000 tonnes of rebar per order.

French domestic rebar contracts are stable on August at an average of €900-920/tonne ($877-898) ex-works including size extras. The low point of the range is pegged at €850/t and high point of the range at €950-1,000/t, depending on client and tonnage, sources suggest. Some slightly lower-priced material sales are being reported, particularly in southern France, from Spanish and Italian producers.

Rebar market players in Germany and Austria also point to a drastic slowdown in home construction. A recent purchasing round saw transactions at rebar base prices of around €750/t. Mills then lifted offers to €800-840/t, although observers say these are hypothetical, as long as nobody is buying. The next purchasing round will be for production in October/November (see Kallanish passim).

In Italy, rebar prices are beginning to recede due to poor domestic sales volumes, and are pegged at €680-700/t base ex-works.

Natalia Capra France

Numerous European coil mills have reduced their output, idling blast furnaces here and rolling mills there, but a resulting market supply shortage that would lift prices is yet to be felt.

Inventories at stockholders and consumers are still very full, according to sources in various countries. “Mills have taken the necessary measures, but the output volumes are still not in balance with the low demand,” a Dutch buyer tells Kallanish. A manager of an Austrian service centre concurs, voicing the impression that mills are still vying for volumes to utilise the reduced capacities.

However, a Benelux service centre manager sees light on the horizon. “The reduction of output will lead to longer lead times, and that’s when distributors will get nervous,” he cautions. He argues that distributors and big consumers will anticipate stretching delivery times, “and they will start replenishing to avoid shortages, and prices will rise alongside”.

Sources so far agree in that they do not see prices sinking below summer levels any more. For hot rolled coil, this means a current price range of €750-800/tonne ($732-781) ex-works in the Benelux, Germany and Austria. With similar price levels currently in Italy, Austria’s price advantage over Germany has temporarily disappeared.

The premium of cold rolled coil over HRC is at €80-100/t, while that of galvanized coil will be between €100 and €135. Within these ranges, prices differ quite a bit from one mill to another, the Austrian manager notes.

Christian Koehl Germany

Some sales activity for Italian stainless steel coils, sheets and tubes is resuming in September after a long period of market weakness, sources in the sector tell Kallanish.

While most service centres and re-rollers report some improved sales, however, some sources believe this may only be the result of a seasonal effect. July and August were very weak months and coil buyers continue to order very little. As stocks remain high, sources do not expect a demand rebound in October as uncertainty and high prices continue to slow market activity.

France, Italy and Spain continue to drag compared to a slightly more dynamic Germany. Stainless flat products and tube stocks are said to be reducing in Germany, but this changes according to each distributor.

Despite the negative sentiment, the feeling in Italy is that the fall in prices of coil and its derivatives has ended thanks to the multiple production stoppages across European steelmakers. The situation remains particularly complicated for laser and decoration pipes, for which demand continues to be in a deadlock. Tube prices lost a further €200/tonne ($195) in September.

Despite some improvement in flats sales being registered in all European countries this month, “there is fear of losing orders, and uncertainty”, a source comments. Service centres continue to order as few coils as possible and are now receiving material bought earlier at very high prices.

Stainless cold rolled coil in Italy is below the level of €3,000/t, at about €2,850-2,950/t. Hot rolled coil is at about €2,500-2,650/t delivered, sources suggest. For October delivery, steelmakers are not quoting, but they are expected to push up values.

Natalia Capra France

Schuler says it has developed various solutions for effective protection against cyberattacks, Kallanish hears from the German sheet press equipment maker, a subsidiary of plantbuilder Andritz. This comes amid increasing cyber attack cases at metalworking companies, it says.

The system has been developed with partner company Otorio and will be marketed under the name “Cyber Security Check” against theft, damage, and production downtime.

Schuler and Otorio are offering to initially conduct an inventory of equipment and the entire production network, with an eye on holes for malicious software, viruses, incorrectly configured firewalls, and outdated operating systems. Gaps in the security situation are identified and then the risks are prioritised according to their impact on business processes as well as other components, Schuler explains.

A minimum level of appropriate precautions is now required by many insurance companies and also lawmakers, and failure to implement this may lead to hefty fines, Schuler notes.

Christian Koehl Germany