Market participants said they saw production cuts as necessary to stabilize the bear market, with spiraling discounts doing little to stimulate trading.
S&P Global Platts assessed hot-rolled coil in Northern Europe down Eur10/mt Aug. 24 at Eur700/mt ex-works Ruhr.
Producers reported deals at Eur700/mt ex-work Ruhr, confirming the assessed level, with buyers agreeing the price was representative of the current market.
However, overall trade remained limited, with little uptick in demand as a result of mill discounts. Despite declining prices, buyers were reluctant to further inflate high stocks, preferring to wait.
Market sentiment was general confusion about mills chasing business iteratively lower, with cash flow and sustainability of production floated as potential factors by sources. A mill source offered the same, warning of sales below costs on the current price direction.
“European mills are shooting themselves in the knee trying to attract buyers with lower prices — regardless of how low they go, there is no demand,” the source said. “Steelmakers will have to cut production soon. Otherwise, sales will continue further into loss territory, with subsequent closures anyway.”
A second mill source lamented poor sales volumes against rising costs, estimating a sustainable margin at Eur760/mt ex-works Ruhr.
Achieving this level is another question, however, with offers heard available from an integrated German mill at sub-Eur700/mt ex-works Ruhr on the day.
Distribution sources saw production cuts and a substantial increase in prices as necessary to stabilize the market, though with inventories the primary barrier to purchasing, there was doubt about whether any demand revival will be seen the rest of the calendar year.
In South Europe, the market continued to wait for mills to resume production before speculating as to September price levels or activity, with the Platts assessment stable at the same Eur700/mt price level ex-works Italy on the day.
— Benjamin Steven, Maria Tanatar