European coils market steady; expectations of higher prices from auto return, energy costs

The European coils market was inactive on New Years Eve, with most sources still on holiday and expected to return Jan 3. Despite revelling in the tranquillity of the holiday season, uncertainty still prevailed for next year. Most market participants were optimistic about a potential price increase propelled by a surge in automotive demand, with some OEMs now restarting following a production slump.

Others, however, were still cautious about a price decrease, harbouring doubts about a rapid recovery from the automotive sector and the reality of cheaper import prices come the second quarter of 2022.

There is still much to expect for the steel market in 2022 – the revaluation of steel safeguards in early January, the exhaustion of ‘other countries’ quota in Q2, rising energy costs, magnesium shortages, increased Chinese export duties, and the tumultuous road to achieving green steel.

The revision of section 232 could also spell trouble for Europe, with US prices still fairing a lot better than domestic European steel prices. Mills looking to export sufficient steel quantities could result in another shortage if automotive demand proves to be robust, sources have warned.

The daily Platts TSI US hot-rolled coil index was unchanged at $1,500/st on an ex-works Indiana basis Dec 30, having a $457/mt premium over North European hot-rolled coil.

Plate prices could also see a push upward, with one Italian mill source citing a tradable value at Eur880/mt ex-works Italy, with tendencies towards Eur900/mt growing closer based on a ‘higher energy costs forecast.”

The promise of a bullish Q1 was not a unanimous outlook among UK participants, with one trader concerned about the lack of customer inquiries.

“Not sure what Q1 will bring in all honesty, fingers crossed for an uptake in demand.”

— Amanda Flint