Participants are warning the European market may not be ready to accept a large rise in coil prices following the recent announcement of increases by ArcelorMittal, Kallanish learns.
While the hike has likely been encouraged by the Carbon Border Adjustment Mechanism (CBAM) coming into effect since the start of the year, the preceding months saw a slow and gradual increase gaining ground.
“But attempts by steel mills to raise prices more quickly are likely to meet resistance from processors who are not yet able to pass on these costs,” a Dutch manager believes.
He sees recent import offers from Turkey and the Middle East for hot rolled coil at up to €540/tonne ($633) cfr Antwerp. When adding CBAM costs, depending on the case, there would be barely any import arbitrage, with domestic HRC trading at €630-650/t ex-works until last week, he says. ArcelorMittal’s new offers take HRC to €700/t.
The hikes appear bolder for cold rolled coil and hot-dip galvanized coil, with offers now standing for CRC at €830/t and for galvanized material at €820/t. The previous highest quotes were reported in the Netherlands at €750 for CRC and €760 for HDG.
Notably, CRC offer prices have now eclipsed that of HDG. A German observer tells Kallanish that domestic mills have had less interest recently in producing CRC, preferring HRC and HDG, resulting in CRC becoming scarcer on the market.
The Dutch manager also points at EU measures, such as the ongoing anti-dumping investigation into CRC, where higher duties are expected soon. For mills this justifies an extra premium for cold-rolled material, he notes.
One German buyer finds that ArcelorMittal “takes it too far” and that the new prices for CRC and HDG, in particular, “do not fit the market at all; maybe for some special high-grade material”.
He is concerned the new quotes will scare buyers, who will then become even more reserved. “Many will hold back their orders, and a standstill is always bad for the market,” he adds.
