European service centres and traders report early signs of improved demand following recent price increases by European producers. Demand for coil derivatives has also shown improvement since July, as customers expect further price hikes and are looking to secure tubes and sheets at current values.
According to a northern European service centre, the signs of a potential price recovery are driven more by protectionist measures than by a real improvement in consumption, which remains weak and uncertain.
Sources who spoke to Kallanish indicate the European Commission is expected to release its recommendation for a safeguard replacement measure by the end of September, with implementation planned for January.
Market participants in northern Europe and Italy agree that, given the current and future protectionist measures, further coil price increases are likely in the fourth quarter. However, in September, EU producers will face the challenge of needing to sell into a market where many large buyers are holding back, having already secured import volumes from Asia and the Middle East in June and July at competitive prices. Asian producers are now said to have started shipping very large volumes of coil to Spain, Italy and northern European ports.
European steelmakers raised prices last and this month but the market remains subdued due to the summer lull. Many mills are facing significant cost overruns, inefficiencies and labour challenges. Additionally, the introduction of new green steel capacity in Europe will add another layer of complexity to the market.
Stegra, formerly known as H2 Green Steel, says it intends to begin commercial production in about one year from now. Hydnum Steel meanwhile aims to begin plant construction by the end of 2025. In May, Blastr Green Steel said it had secured the zoning plan in the Joddböle industrial area for its green steel plant project in Inkoom, Finland.
According to the source, these green steel projects may soon add 6-8 million tonnes to the market. This does not take into account the two new coil projects implemented by the Metivest-Danieli joint venture in Piombino, Italy, and Marcegaglia’s new French coil plant in Fos-sur-Mer. Start-up for both projects is scheduled for 2028-2029.
According to a Swiss source, the EU may postpone the implementation of CBAM by one year, a delay that would be offset by the introduction of a new safeguard measure but would give buyers the opportunity to keep purchasing from Asia to the detriment of European price increases. Downstream, service centres report rising demand ahead of the August holidays in several European countries, as customers anticipate price increases.
Sheet prices are expected to rise by €30-40/tonne ($35-46) in September, aligning with recent coil producers’ hikes. Hot rolled coil prices in Europe remain stable before the summer stoppages, ranging between €525-550/t base ex-works, with the lower end of the range seen in Italy.
Natalia Capra France
