The European stainless flat steel market is facing a significant downturn, characterised by weak order intake across the entire value chain and a persistent downward trajectory in coil prices, stainless steel sector sources report.
Mills in Europe are decreasing their prices for June and July delivery. From the high point of the range recorded recently, EU coil values have experienced a decline of over €100/tonne ($112), while order books continue to face significant pressure, Kallanish notes.
Supply of coil in Europe remains above demand, with a substantial influx of material from Asia anticipated by July. This situation is likely to bolster inventory levels among buyers and contribute to a further decline in domestic purchases.
Mill sources and a steel processor in northern Europe indicate the market is expected to face continued pressure in the upcoming quarters. However, a potential recovery may emerge after the summer, as inventory levels in Europe are projected to decrease. This scenario could compel buyers to source coil domestically, benefiting from quicker delivery times.
Service centres and their customers are currently engaging in low-volume transactions, often on a back-to-back basis, in order to mitigate exposure in this unpredictable market environment.
Several processors suggest first-quarter deliveries were consistent with those of Q1 2024; one reports achieving a modest profit. “Today, if you’re in the positive, it is already a success,” he adds.
Several service centres are facing financial challenges and have been unable to raise their prices for sheet, which are now considered unsustainably low. A mill source indicates producers may have hit the threshold of their elevated cost structures and, at current pricing, they are encountering financial losses.
From a macroeconomic standpoint, anticipated interest rate reductions are likely to provide a more positive outlook, while end-users appear to feel that demand has bottomed.
The mill source confirms the projections that Q4 will yield some market improvement. Current pricing for domestic cold rolled coil in northern Europe is hovering within the range of €2,350-2,400/t delivered, depending on order volumes and specific buyer requirements.
The forecast for 2025 appears unfavourable. Businesses are competing for orders, with some prepared to reduce prices, with the end-user being the main beneficiary, a service centre comments. Nevertheless, lowering prices is not creating demand. Asian CRC prices are significantly lower than those in Europe, currently at €2,100-2,120/t cfr duty paid. Logistics and port expenses of about €100/t come on top, as well as financing costs.
The implications of CBAM are creating a significant atmosphere of market uncertainty, particularly for service centres grappling with the ambiguity surrounding the mechanism and the challenges in quoting specific products to end-users. A coil buyer says they will cease sourcing from the import market. Downstream, the objective for each upcoming quarter this year is to achieve at least breakeven and navigate the challenges without incurring losses.
Natalia Capra France
