European stainless coil hikes again, pricing formula questioned

European stainless steel hot and cold rolled coil prices are increasing due to hiking alloy surcharges. Contract prices remain firm amid continued short supply, Kallanish hears from market sources.

Demand in Europe, however, has reached a standoff due to unsustainably high alloy surcharges that still continue to increase. Sources say mills are now quoting for July delivery but it is proving difficult to fill order books based on the usual price calculation of base price plus alloy surcharges.

Outokumpu has increased its surcharges for May. The new figure for grade 304 (1.4301) is €3,844/tonne ($4,123), up from €3,251/t in April. According to the formula applied by all steelmakers to calculate coil prices, €3,844/t will be added to the base price of €1,600/t. This gives a new value for CRC of over €5,400/t delivered, a price considered unacceptable by many buyers.

Large buyers in Europe are withholding local purchases and only buying imported material from the Far East. Some smaller buyers are nevertheless implementing mixed CRC purchases, buying some imported material and low tonnages in Europe at between €4,900-5,400/t delivered.

Mills are refusing to give up their pricing formula officially, but some are accepting discussions with their customers and are making tailor-made offers that may differ from buyer to buyer, depending on payment conditions and tonnages. The practice of allocating material with “open prices,” or no prices, until the monthly alloy surcharges are published, is also a widespread habit. Three sources, however, agree that the current price situation is unsustainable and mills will have to accept a fixed price for future sales.

Re-rollers and service centres throughout Europe say they have strong order books for flat products and some of them are reporting September lead times. The gap between European CRC and values from the Far East remains significant. Material from China and Taiwan is offered at €4,300-4,400/t cfr Europe, meaning a differential of over €1,000/t, sources suggest.

While some European mills are trying to negotiate with customers, others are reported not to be quoting. While CRC in Europe remains in short supply, HRC is more available, at more reasonable European prices of €4,300-4,400/t delivered, depending on customer.

Natalia Capra France