The European coil market is showing no signs of recovery, remaining subdued with weak demand and limited pricing momentum on the domestic and import markets, sources told Kallanish on the sidelines of last week’s EUROMETAL 75th Anniversary conference held in Luxembourg.
While import prices appear to have reached a floor following a sharp decline, particularly low levels are still obtainable from Asian suppliers for large-volume orders of 50,000-tonne vessels. Nevertheless, buyers remain cautious, purchasing only when pricing is attractive.
Two mill sources in southern and northern Europe confirm the continued market weakness, noting that lead times remain short. No significant improvements are anticipated in the short term, while transactions are expected to be limited this month and focused on small tonnages.
Prices for downstream products, including tubes and sheet, particularly in Italy, are also on a declining trend. Market participants do not foresee any substantial improvement in coil or derivative sales in July ahead of the traditional August production stoppages.
In Spain, there is more optimism. A local steel processor reports solid results in June, with prices approximately €20/tonne ($23/t) higher than in Italy. Orders from the automotive sector are also holding up better than in the Italian market, suggesting a stronger demand environment.
In Italy, France, Spain, Belgium, Luxembourg and Germany, service centres are adopting a selective purchasing approach, sourcing both within and outside the EU.
Current Asia-origin hot rolled coil import transaction values range between €460-490/t cfr Italy, depending on origin and volume. Domestic base prices are reported in the range of €530-550/t delivered, with the low end seen in southern Europe.
Two German sources report bids dipping below €540/t base in their market. Many agree that European coil prices are likely to continue a slight downward trend until the end of the summer holiday period.
In Italy, Turkish-origin HRC offers are currently reported at €470/t cfr excluding duty, and between €485-490/t including duty. Indonesian-origin HRC is traded at €460-470/t cfr, while Indian-origin suppliers and other Asian countries are quoting slightly higher, at €500-510/t cfr.
Any new import orders from Asia are expected to be impacted by the upcoming Carbon Border Adjustment Mechanism (CBAM), adding further uncertainty to the import market.
An Italian service centre reports that companies are now incurring losses and facing challenges in securing insurance coverage, even for large customers.
The implementation of CBAM is expected to have a severe impact on service centre and re-roller margins as, from July onwards, importing at competitive prices will become increasingly difficult.
Additionally, the euro-dollar exchange rate remains unfavourable for buyers and is expected to deteriorate further, compounding pressure on margins.
According to Marcegaglia ceo Antonio Marcegaglia, flat steel prices are expected to reach their lowest point this summer before starting to recover in the fourth quarter. This will be driven by the European Commission’s safeguard measures review, existing quota systems, and CBAM.
Natalia Capra France
