EU steel sections prices soften amid low demand

European domestic steel sections prices weakened the week to Sept. 15, as sources cited weak demand in the market amid softening scrap prices.

S&P Global Platts’ European medium sections price (category 1, S235 JR) was assessed at Eur1,030/mt delivered Sept. 15, down Eur20/mt on week.

One distributor in the Benelux region cited a deal for 1,000 mt of beams at Eur1,040/mt delivered, noting that the demand for medium sections seemed to be picking up amid a return from holidays across Europe.

Waiting for a drop

Another Benelux-based distributor source, however, noted that customers are waiting for prices for long steel products to move lower since scrap prices are down on month. But mills are highlighting high energy and transportation costs and are reluctant to lower prices significantly.

“Transportation is difficult, costs are high, and deliveries are still an issue,” he told Platts. “But mills are starting to get a bit nervous because I hear that in Europe everyone is waiting.”

The source noted that demand will recover in the near term as different projects were progressing.

“People are speculating that prices will go down, but demand is still there, so after a certain point people will have to buy,” he told Platts, adding current tradable levels for medium sections category 1 were at Eur990/mt delivered Benelux.

“The port of Antwerp is full of material to be declared on Oct. 1,” he said. “I am still getting offers from Turkish mills for beams and merchant bars, but lead times are very long. They are offering November shipment or later, which is not suitable.”

The EU import quota for non-alloy and other alloy merchant bar and light sections of Turkish origin for the third quarter totaled 65,582.60 mt and was already exhausted by July 13. The fourth-quarter quota has the same tariff-free volume.

One European mill source noted that tradable values for category 1 medium sections in Germany were Eur10-Eur15/mt higher than in Southern Europe and cited tradable levels for Germany at Eur1,020-Eur1,040/mt delivered.

Beyond scrap costs

Although demand is low at the moment and scrap prices are softening, but it is a “common mistake” to just look at scrap costs, the source told Platts, citing elevated energy costs.

“OK, scrap has moved down, but there are other costs that are extremely high,” he said. “So, there needs to be a balance between all costs. Demand is quiet because customers are looking at raw material and thinking that scrap is down. So, it’s like a circle.”

Platts’ assessment for Southern European shredded scrap was at Eur432.50/mt delivered for September contracts, down sharply from Eur480/mt from August.

In Northern Europe, Platts’ September assessment for domestic shredded scrap was at Eur397.50/mt delivered, down from Eur440/mt in August.

European gas hit all-time record highs amid a tight global market and Russian supply concerns for the winter in case of a delayed commissioning of the Nord Stream 2 gas pipeline, Platts reported.

Platts assessed the benchmark TTF day-ahead contract Sept. 14 at a record high of Eur66.05/MWh, up from Eur10.43/MWh a year ago.

— Rabia Arif, Staff