European CRC, HDG prices tumble on lack of demand

Domestic prices for cold-rolled coil and hot-dipped galvanized coil have dropped over the week ended Aug. 24 as steelmakers struggled fill orderbooks.

Platts assessed domestic HDG prices in Northern Europe at Eur850/mt ex-works Ruhr, down Eur30 week on week.

Offers for the material have been heard at Eur860-900/mt ex-works Northern Europe. Both buyers and sellers estimated tradable value at Eur800-900/mt ex-works Ruhr, with a majority of sources indicating Eur850/mt ex-works as an achievable price.

Platts assessed CRC in Northern Europe at Eur815/mt ex-works Ruhr, stable day on day and down Eur55 week on week.

Two steelmakers estimated tradable value for CRC in Germany at Eur800-850/mt ex-works. However, a buyer reported offers at Eur820/mt ex-works, and he said that the mills were ready to give discounts if they would have received firm bids.

Demand from distribution in Europe has been low, as the buyers have full stocks of coil and have been avoiding fresh bookings in the bearish market. In addition, spot buyers have been concerned that destocking has been slower than they had expected, and they preferred to stick to a wait-and-see approach, at least until the second half of September, when both price trends and demand expectations should become clear.

Against earlier expectations, the automotive segment is unlikely to show substantial recovery in H2 2022 due to ongoing issues with components supply and the unfavorable global economic situation, market sources said.

“Currently demand is tragic, buyers have high stocks, automotive claims that they will require more steel, but they will end up taking less steel that they have announced, as usual,” a third steelmaker said. “Current finished steel prices combined with production costs is a disaster.”

“Mills cut prices but that failed to trigger higher market activity,” a Northern Europe-based service center said. “It seems that further steel production reduction is the next step the mills will have to take, as demand remains the main problem. Buyers have full inventories as they panic bought too much coil after was start in Ukraine.”

Some market participants, however, have been more optimistic in their outlook on steel demand from carmakers, but steelmakers continued to cut spot prices.

“Outlook for automotive industry is cautiously positive, demand should be better,” a German trader said. “The mills are so desperate to sell material that they are ready to go below costs in some cases to complete a sale.”

Platts assessed South European CRC at Eur800/mt ex-works Italy on Aug. 24, down Eur75 week on week, and assessed domestic HDG at Eur820/mt ex-works, down Eur60 over the week.

Market participants estimated achievable prices at Eur800/mt ex-works for HDG. Offers for Italian HDG were reported at Eur830-840/mt ex-works, and a tradable value was heard at Eur800/mt ex-works Italy.

Italian mills had not yet resumed production following summer maintenance.

Rising energy and other costs, combined with weak finished steel prices, would require actions from European steelmakers. Market sources said the mills would\ need to reduce output and needed to review surcharges.

Some producers have already tried to introduce an energy surcharge for CRC, and others have been evaluating such actions due to a sharp rise of energy prices in the EU.

For HDG, some sources said that, due to high prices of zinc, mills needed to review extras for coating.

“Currently that would not be accepted and extras for hot-rolled and CRC should also be revised as well on higher ferroalloys costs and rising energy costs,” a Northern European mill source said.

Market participants believed that it would be challenging to review surcharges upward while a downtrend was in full force in Europe.

Platts is part of S&P Global Commodity Insights.

— Maria Tanatar, Benjamin Steven