Coil prices to recover slightly: Marcegaglia

International coil prices may increase slightly towards the end of the second quarter or beginning of Q3, Marcegaglia chairman Antonio Marcegaglia told Kallanish on the sidelines of the Danieli “Innovaction” event in Udine on Wednesday.

“Final demand for coils at an international level is rather static. Some consumption rebound is expected but I believe it will be more of a technical restocking thanks to some improved confidence in the relative price stability,” he noted.

“At an international level, the price has slightly improved [versus recent weeks]. The spread [between Asia-origin hot rolled coil import prices and] European levels has been reduced and there is no reason why prices should decrease further. Instead, it is plausible that values might in fact slightly increase,” Marcegaglia added.

The hike would be driven by the quick exhaustion of EU safeguard quotas, long lead times and the uncertainty related to the quota renewal, which is pushing deliveries of Asia-origin material imported into Europe towards September and October.

“It is plausible that this situation may cause some limited material availability on the European market. Despite the rather calm final demand, low stocks and lower imported material availability are the reasons for a possible consumption recovery, accompanied, I think, also by a slight price rebound,” Marcegaglia continued.

“On a smaller scale, we have seen this happening in the stainless steel [coil] segment owing to a situation of low imports, coupled with a strong reduction of European availability caused by the Acerinox and Outokumpu production slowdown,” he added.

Given the low consumption, this shortage was initially underestimated, but it caused prices of stainless coil, as well as its derivatives, to increase significantly. Marcegaglia sees a similar situation happening for carbon steel coil, although the price increases should be more moderate. Coil import prices from the Far East are now mostly stable, with a rebound registered of €20-30/tonne ($21-32) compared to the lowest levels seen in recent weeks, but import offers lack attractiveness.

Cold rolled and hot-dipped galvanised coil are both seeing weak trading. The spread between HRC and CRC/HDG prices should be wider than current levels. Stocks through the value chain are however low.

“The perception of the low stocks is not that clear. The visibility on the final consumption is short, also for service centres, and the general perception is that the order book weakness is compatible with the low stocks,” Marcegaglia observed. However, “we are going towards a favourable season. May was hampered by a series of holidays. Some activity should move in June”. In June and July, the market should see some recovery of apparent demand.

Downstream, the tube and sheet markets are suffering from weak prices and volumes due to uncertainty, but stocks also remain low, particularly for sheet. Demand is generally stable for welded tube depending on the end-user sector. “Overall volumes at the end of each month are not dramatically low but they are built slowly and with great cautiousness,” Marcegaglia noted.

Last year, Marcegaglia posted €7.8 billion ($8.4 billion) in revenue, slightly down from 2022 due to lower pricing, despite increased shipments. The decline was also driven by the consolidation of Outokumpu’s long products acquisition in 2023.

Kallanish assesses Asia-origin HRC transactions at €590-600/t cfr Europe on average, while Turkey is at €10-15/t higher duty paid. European HRC prices are at €630-640/t base delivered or ex-works, depending on the country.

Natalia Capra France