European market expects coil supply disruption in April

Strong supply chain disruptions are expected in April and May throughout the European coil complex due to the fires hitting ArcelorMittal in Spain and France, and the Tata Steel force majeure at Ijmuiden in late February, sources tell Kallanish.

This, coupled with significantly reduced coil production at Acciaierie d’Italia, one of the largest steel mills in Europe, and reduced allocation from Asian suppliers to Europe, is expected to put a strain on the EU value chain.

Some buyers in the automotive and appliances sectors are experiencing delivery delays. European producers’ lead times were already extended to June before ArcelorMittal’s fires. Some European producers are already pushing their hot rolled coil prices to €900/tonne ($979) base ex-works, but the current production disruptions suggest further hikes will materialise.

Meanwhile, coil service centres and re-rollers are reporting a fragile market downstream and are finding it challenging to pass on the recent coil increases to their clients. Demand is weak, consumption even lower, and the distribution sector, sceptical about price increases, is refusing to push up prices of sheet and welded tubes. The basic grade for both products should be sold at over €1,000/t but paid values are some €70-80/t lower. A source in Italy says that coil procurement difficulties may convince distributors to also increase their prices despite the low sales activity.

While coil lead times will most certainly lengthen in the coming weeks, the gap between import prices and European HRC is also expected to widen. Imported HRC from Asia is being offered at between €750-800/t cfr Italy, with lead times extending until August or September. Allocations however continue to be small, at 3,000-10,000 tonnes. European material is quoted at €870-890/t base delivered, with the lower point of the range paid in southern Europe.

Natalia Capra France