European hot rolled coil contracts are expected to experience a substantial increase until the end of the year. This is due to the European council’s ongoing discussions regarding the implementation of more stringent tariff measures to safeguard European steel.
The potential for a price increase throughout the value chain is a result of an increase in apparent demand since the first days of October, as well as the absence of a viable solution to purchase on the import market without duties and potential production cuts both upstream and downstream.
During the forthcoming EuroBLECH 2024 event next week, it is expected that HRC producers will announce production reductions for the first quarter of 2025, according to several market sources. The move is perceived as an essential measure to bolster the price increases that southern and northern European producers implemented in October. A major HRC buyer tells Kallanish that coil prices may increase by approximately €70-80/tonne until the end of the year. This will result in a price increase for coil derivatives, including welded tube and sheet, for which values are now below cost.
The price of welded tubes and sheets has been under pressure throughout the third quarter, and the low levels are persisting. Service centres and re-rollers are reporting negative financial results in Q3 due to the protracted situation of high costs and no margins.
“We are beginning to receive reports of financial difficulties from certain European re-rolling facilities.” a tube manufacturer in Italy says. “We are all reducing capacity as coil producers should, but we have heard that competitors are planning to close facilities in Europe.”
In Italy, tube producers have been able to recuperate approximately €20/t by reducing discounts over the past weeks. One reports better demand in October. However, in order to regain a degree of profitability, they will need to recover a total of €40-50/t and will continue to reduce discounting. Currently, the price of a commodity-grade tube is approximately €700/t ex-works or lower. According to an additional source, this does not include any profitability considering the cost of coils and other fixed costs re-rollers face.
HRC European contracts are ticking upward as a result of the price hikes implemented in October. Contracts are currently being executed at a base ex-works price of €540-550/t. The low point of the range of €530/t seems to have been lost. The majority of EU producers are presently offering a November lead time and are aligning their quotes with ArcelorMittal’s new HRC quotes, which are priced at €590/t base ex-works, or €600/t delivered.
However, transactions continue to be scarce in spite of the heightened interest in purchasing. Uncertainty and cautious behaviour are prevalent.
Cold rolled and hot dipped galvanised coil levels are stable whilst HRC prices are increasing in Europe. The CRC import contracts from Asia, which are priced at approximately €620-630/t cfr, are a source of resentment for local producers. The base ex-works pricing of CRC in southern and northern Europe is approximately €640-650/t. The base price for HDG is €650-660/t. Depending on the volume and the site of delivery, these prices may be ex-works but they are often delivered.
According to two sellers, the automotive sector is currently reviewing its purchasing plans, particularly for HDG. Some HDG and CRC producers provide a lead time of three to four weeks.
“Today, no one has a forecast. We all hope that consumption will resume in the first quarter. Today it is better to produce only what is strictly necessary in order to reduce costs,” a source comments. He mentions that numerous clients have lengthened their payments.
Natalia Capra France
