The premiums fetched for cold rolled and hot-dip galvanized coil over hot rolled coil by no means reflect the extra costs involved in the required processing, according to an EU mill representative.
The customary premium that has been valid for years is €80/tonne for CRC and €100/t for HDG ($87/$108).
This varies by mill and other parameters, and some players even apply the same premium for CRC and HDG.
In the current market climate, these premiums are still used nominally. In the case of CRC, some argue that the gulf has shrunk to around €50/t, as it is the product suffering most from low demand and cheap import offers.
However, as part of a functional pricing structure in a healthy market environment, the premiums would have to be much higher to reflect the increased costs of processing, Kallanish is told by a mill manager.
“Production costs for galvanized have risen stronger than for HRC over the last 2-3 years, mainly because of the higher energy prices,” he says. In addition, many galvanizing plants are located away from the steelmaking mill, thus being unable to benefit from the on-site power production, and have to buy their power on the open market, he argues.
He assesses the real premiums over HRC currently at €150/t for HDG and €130/t for CRC. “Making CRC does not pay off for any steelmaker now: we are better off selling pickled HRC instead,” the manager says. Pickling normally fetches €10-20 over the plain base price, “but these days we do not add it”, he adds.
Imports are hurting domestic European CRC production as they are now taking 35% of the EU market, according to the manager. For HDG, the share is 28%. However, imported HDG is rarely qualified for use by EU carmakers, and so goes mostly to other industries. “And of the other industries, imports now take as much as 50%,” he concludes.
Christian Koehl Germany