A rebound in the European steel market is expected in the first quarter of 2020, market participants told Argus at the sidelines of the World Steel Dynamics conference in Milan today.
Market participants had previously anticipated a market recovery in the third and fourth quarters of 2019. But continuously sluggish demand, destocking, an influx of lower-priced imports and poor performance of EU economies, particularly Germany, have seen prices deteriorate further over the past few months.
Still, the outlook for a tightening of supply in the EU flat products market, owing to production cuts, should see demand balance out and prices lift. Many market participants said they believe that the largest EU producers are undertaking output reductions, but are waiting to announce these cuts in their upcoming third-quarter financial results.
In addition, reduced shipments of Turkish hot-rolled coils are expected to make their way into the EU in the first quarter, compared with previous years, as a result of the 30pc import safeguard quotas cap.
Market participants are concerned that in the case of a slight improvement of the market in the first quarter, steelmakers will try to capitalise and restart any idled capacities as soon as possible, which would jeopardise the longer-term recovery of the EU market.
But not all market participants are as bullish because indications of a pick-up in first-quarter demand, typically exhibited in the final months of the year, are still absent. Import prices also appear not to have reached their bottom yet.
