The assumption that the Carbon Border Adjustment Mechanism (CBAM) will deter importers from buying overseas, leading to a European domestic price recovery, could be overstated, warns German consultant Andreas Schneider.
“The EU’s increasingly protectionist course is likely to lead to lower imports in conjunction with CBAM,” he concedes. But “how quickly and to what extent this will be felt on the market is difficult to predict.”
The overall picture is made up of international price discrepancies, exchange rates, demand in the EU and other EU import duties or quantity restrictions, he finds.
“Recent weeks in particular have shown that even high EU import duties can be at least partially offset by favourable exchange rates and significant price advantages offered by third-country suppliers,” he argues. He also warns that imports could be ordered in excess of actual demand in the short term, to avoid CBAM costs. “It is therefore difficult to predict the extent to which CBAM will divert some of the demand for imports to EU plants,” he notes.
On the European domestic coil market, mills have hiked prices twice in quick succession, aiming to prepare the market for higher transaction prices. Hot rolled coil deal values have since inched above the bottom line of €550/tonne ($642) ex-works, but remained way below the €600/t envisaged by some mills.
According to a Dutch observer, prices for hot-dip galvanised coil are also showing a slight increase, with the level now at around €655/t ex-works for delivery in September to October.
Paid prices could even be higher, for HDG as well as for cold rolled coil, a German buyer says. He finds the two are nearly identical in price these days. “While were are used to price gaps of €10-20 [between CRC and HDG], you will hardly see one at the moment,” he tells Kallanish.
A Scandinavian source notes he has not bought HDG lately, but supplies projects with larger volumes of CRC, for which he pays less than a premium of €100/t on top of HRC.
An Austrian manager also sees CRC values being lower than HDG, but adds he generally dismisses discussion about fluctuations in the CRC/HDG premium. “This is just very relative, subject to the mill’s respective energy cost structure at a given moment,” he asserts.
“I deal with mills that have kept their premium differentials for years,” he states, adding the price relativity is often just a matter of how suppliers define their bases. “Some mills have an €80 premium for CRC and ask for €30 more for HDG. Others charge €100+ for CRC, and ask for €10 more for HDG. In both cases, you end up with €110,” he notes.
Christian Koehl Germany
