European coil and green steel round-up: EU coil largely stable on slow apparent demand

Domestic steel coil prices in Europe remained largely unchanged in the week to 16 October, while distributors were focused on reducing inventory volumes and restocking was limited.

Bullish sentiment, however, prevails in the market, as buyers will have to rely more on domestic producers when they replenish their stocks due to the effects of regulations restricting access to imports – tariff-rate quotas (TRQs), which have been in place in the EU since July this year.

Carbon Border Adjustment Mechanism (CBAM) duties have also made prices of imported coil comparable to those from European mills, and some buyers have switched to less risky local suppliers.

“The additional costs related to CBAM and potential tariffs if the quota is exceeded will be triple-digit, and I am not sure that the supply chain could digest such an additional burden from imports,” a German service center said.

Transactions for domestic hot-rolled coil (HRC) in Northwest Europe have been settled at EUR740-760/t ex-works. In Italy, the material has been available at EUR750/t delivered.

Some Northwest European steelmakers have been more active in the Italian and Spanish markets, taking market share previously occupied by overseas suppliers.

Domestic prices are expected to start rising after distributors’ stocks decrease. The severe competition among distributors as they focus on destocking by the year-end and generate cash flow prevents a price recovery at both mill level and further down the supply chain.

“The current situation in distribution is tough – there is a battle for volumes and severe competition to reduce stocks by the year-end. But there is an understanding that the next round of restocking will be done at higher prices,” an Italian distributor said.

European steelmakers have started negotiating long-term contracts with end consumers, notably the automotive industry. The mills seek an increase of EUR100/t for contracts covering the first half of 2027 compared with those for the second half of 2026. Market sources believe that the long-term agreements will be settled with an increase, but it is unlikely to reach the target of EUR100/t.

Some market participants also reported increases in extras for coil grades and sizes of around EUR50/t, particularly for downstream products, pushing for further increases in effective prices.

Imports have been limited, and prices offered on a DDP basis were largely uncompetitive. In addition, some origins, such as Turkey, are expected to exhaust their quota for the first quarter of next year.

HRC offers from Japan and South Korea have been heard at EUR640-650/t CIF Italy, while offers from Asian suppliers have been reported at EUR740-760/t DDP South European ports.

Green steel market

Demand for green steel coil in the spot market remains subdued, with deals mainly limited to small trial batches. Automotive and construction companies remain the main sources of demand for low-emissions steel.

Premiums for trial volumes have averaged around EUR150/t, while spot premiums for green hot-rolled coil (HRC) produced via the electric-arc furnace (EAF) route have been reported at around EUR100/t.

Most buyers remain focused on adjusting to new trade restrictions and securing sufficient supplies of conventional steel. Distributors continue to show limited appetite for low-CO2 material, typically purchasing it on a back-to-back basis against confirmed orders from end users.

Author: Benjamin Steven & Maria Tanatar

opisnet.com