European flat steel demand to grow in 2024 due to end of destocking: ArcelorMittal

The demand for flat steel products in Europe is expected to increase within the range of 2-4% this year, ArcelorMittal said on Thursday February 8.

“The destocking that impacted apparent demand in 2023 is not expected to continue in 2024,” the company said in its fourth quarter report and full-year 2023 results.

Indeed, improved apparent steel demand in January allowed European steelmakers to secure price rises in the spot market.

Notably, the price of hot-rolled coil in Northern Europe moved up steadily in January. Fastmarkets’ daily steel hot-rolled coil index domestic, exw Northern Europe averaged €731.73 ($787.81) per tonne for the month, the highest since May 2023.

But the trend seems to be changing in early February. Sources told Fastmarkets that in recent weeks buyers have been trying to reduce inventories and were not interested in purchasing new hot-rolled coil tonnages.

Due to sluggish trading, prices for HRC were even slightly down in Northern Europe. Fastmarkets calculated its daily steel hot-rolled coil index domestic, exw Northern Europe, at €755.38 per tonne on Wednesday February 7, down by €4.20 per tonne from €759.58 per tonne on February 6.

HRC prices have been decreasing in the spot market since February 2. According to Fastmarkets’ sources, a full-on downtrend is unlikely because mills have healthy order books, and import options are limited.

ArcelorMittal added that a marginal decline in real demand is expected this year, mainly regarding the construction sector. But the company remained positive on the medium- and long-term steel demand outlook, despite the economic headwinds.

ArcelorMittal Europe’s key indicators in Q4 2023
ArcelorMittal’s crude steel production from its European segment reached 6.63 million tonnes in the fourth quarter of 2023, which was a decrease of 11.3% compared with the previous quarter.

“[The decline in production was] impacted by a reline of blast furnace A at Gent, Belgium, and planned maintenance of blast furnace No2 at Bremen, Germany,” the company said. They added that both blast furnaces (BFs) restarted in early December 2023.

ArcelorMittal noted that some production cuts were also initiated at BF1 in Fos-sur-Mer, France, and the company has confirmed that BF1 remains idled and did not give any timeline for its restart.

ArcelorMittal’s European steel shipments were stable in the fourth quarter of 2023, reaching 6.51 million tonnes compared with 6.54 million tonnes in the previous quarter.

“[This was] due to the continued weak apparent demand driven by destocking and construction-related demand,” ArcelorMittal said.

Sales in the fourth quarter declined by 10.2% from the previous quarter, to $7.99 billion, due to a decrease of 4.4% in average steel selling prices.

According to ArcelorMittal Europe, the average steel selling price in the fourth quarter of 2023 was $975 per tonne, compared with $1,020 per tonne in the third quarter.

The operating income of the European division of the company reached $11 million in the fourth quarter, compared with $160 million in the previous quarter. According to the company, the main reason for that was the negative price-cost effect.

The same factor influenced ArcelorMittal Europe’s earnings before interest, depreciation and amortization (Ebitda) results, which decreased by 28.9% to $336 million in the fourth quarter compared with $473 million in the previous three-month period.

Sustainable development
ArcelorMittal continues with its efforts toward low-carbon steel production in Europe. According to its report, the company expects that its 1.1 million tonne per year electric-arc furnace (EAF) in Gijon, Spain, will become operational in the first half of 2026. Thus, the site will be able to switch to producing low carbon-emissions steel for the long products sector.

The contracts for the construction of the new capacity were signed in November last year.

According to Fastmarkets’ information, ArcelorMittal operates two BF’s in Gijon with a total capacity for 4.65 million tpy of pig iron. The Gijon steelworks has capacity for about 600,000 tpy of heavy plate, 600,000 tpy of wire rod and 400,000 tpy of steel rail.

In July 2023, the company started low-carbon plate production in Gijon.

The steel producer also noted that it signed a Letter of Intent with EDF in January for the long-term supply of low-carbon electricity to ArcelorMittal’s steelmaking sites in Fos-sur-Mer and Dunkirk, France. ArcelorMittal added that its direct-reduced iron/electric-arc furnace (DRI/EAF) project in Dunkirk was subject to final approvals.

“ArcelorMittal has seen increasing demand for its low carbon steel — XCarb® recycled and responsibly produced steel,” the company said.

But the overall demand for steel with reduced carbon dioxide emissions remained quite patchy in Europe, mainly driven by the automotive and construction industries, with the biggest uptake of the material being observed in the Nordic states, the Benelux region and Germany, Fastmarkets heard.

Fastmarkets’ weekly assessment of the green steel domestic, flat-rolled, differential to HRC index, exw Northern Europe was €150-250 per tonne on Thursday, unchanged since December 14.

Sources expect demand for green steel to rise exponentially in the next few years while supply will likely remain limited until new capacity comes online in 2026-2027, so premiums are likely to remain high.

Some mills noted positive dynamics in green steel sales already in 2023, despite overall volumes still being limited.

ArcelorMittal Europe intends to reduce CO2 emissions by 35% by 2030, and to reach carbon neutrality by 2050.

In November last year, Schneider Electric and ArcelorMittal announced a partnership to supply XCarb® steel for Schneider Electric’s electrical cabinets and enclosures.

And on January 16, Vestas and ArcelorMittal announced a low-carbon partnership, and the first project will use XCarb® heavy plate steel for an offshore wind farm built by Baltic Power in Poland.

Published by: Julia BolotovaDarina Kahramanova