One of the main topics widely discussed at EUROMETAL’s Steel Trade day conference, held in Dusseldorf on November 5, was the persistent imbalance between demand and supply that has troubled the European steel coils market for months. This imbalance has significantly hindered domestic suppliers’ attempts to raise prices.
The mismatch between demand and supply largely stems from weak demand in consumer industries, as supply levels have remained fairly steady in recent years, particularly within the EU, Metal Expert has learnt at the conference. “The volumes going out of service centers’ doors directly to end users, I think, went down quite a bit. I would estimate that around 30%, depending on the area,” noted Maruan El Daghma, Managing Director at Primex Steel Trading, during a panel discussion.
Declining consumption, both real and apparent, reflects ongoing economic uncertainties and weaknesses in both global and EU markets. The EU’s protectionist policies have also negatively impacted the distribution sector. “If the cost side is unpredictable, then you are of course cutting your inventory to a minimum to remain flexible. And I think that’s what we have seen over the last 12 months. A lot of importers have been hit hard by the safeguard duties and I think that the risk appetite has gone down,” explained Alexander Julius, Managing Director at Macrometal. Though some level of imports continues, distributors are “super cautious that the cost base does not exceed the level where you’re going into deep losses,” he added.
All panelists agreed that no price improvement is possible until the end of the year, considering the current low level of demand. Looking to next year, perspectives varied. “The long-term logic of the market would dictate too much supply, too little demand, not enough investment to persuade people to spend money, lots of fear around massive amounts of world issues. So I would say it’s going to be a struggle to get pricing up,” said Julian Verden, Managing Director for Europe at Stemcor.
Tayfun Iseri, Chairman of Yisad, also noted that the core issue is low demand, not oversupply. “Supply has been pretty much stable [globally over the last few years]. If China continues to supply over 100 million t a year, I just cannot see the prices going up unless the demand picks up. And for the next six months, I just cannot see the demand going up,” he said.
Conference participants identified only two potential drivers of a price increase in European coils: reduced HRC import availability due to safeguard measures and the ongoing anti-dumping investigation targeting Egypt, Vietnam, India, and Japan, combined with lower EU interest rates.
“The first quarter might be a bit early, but I think in the further development of the year hopes are for a better recovery of the market in view of reduced imports. And that means also reduced availability. But again, I think the first quarter may be a little bit too early,” Julius said.
“I don’t think that the demand will be extraordinary at this point in time. But we should also not underestimate the impact of a lower cost of money entering 2025. We already have 0.75% lower cost of money right now. We’re going to have another interest rate cut pretty soon. Realistically, money is going to cost 1% less. After around two and a half years of destocking, I think that a cautiously optimistic view could be seen: not great demand, but good for automotive manufacturing. It should be slightly better than in 2024,” added Marco Micciche, CEO of Eusider Trading.
Lilit Papoian
