EU flats spreads seen recovering from record low

European suppliers of flat products are expected in the short term to be successful in somewhat widening the spread between local finished steel prices and input costs. This comes after they reached a record-low level, Andreas Schneider from Stalhmark Consult explained during a webinar organised by EUROMETAL. 

According to the analyst’s calculations, in June this year spreads for hot rolled coil produced through the blast furnace route in Europe fell to below €200/tonne ($226). Back in 2017/2018 these were stable at above €300/t, before starting a steady descent in the fourth quarter of 2018.

“Assuming raw material prices will not change drastically from the current levels, my assumption is that prices for flat products in Europe cannot go lower,” Schneider said. He added that he forecasts a stabilisation with a small upward movement.

Spreads will rise by some €10-20/t, possibly taking the HRC spread to above €200/t again, he continued.

According to Kallanish price series, HRC transaction prices in northern Europe remain under pressure despite attempts by local mills to raise their offers by as much as €50/t. Prices remain at around €400/t base ex-works, the lowest level registered since Q2 2016.