European domestic flat steel prices increased in the week to Wednesday March 4, supported by tight supply and persistent import limitations, with new concerns about the effects of the conflict in the Middle East on trade flows adding to the picture, Fastmarkets heard.
During the assessment week, market participants became increasingly worried following recent shifts in geopolitical dynamics, which escalated after the US and Israel’s attacks on Iran, and has since led to higher energy prices across Europe.
Natural gas prices in Europe were hovering above €50 ($58) per MWh on March 5, compared with around €30-34 per MWh during the month of February, industry sources told Fastmarkets.
Energy price spikes could be particularly important for cold-rolled coil (CRC) production, Fastmarkets understands.
“Batch annealing [the heat treatment procedure for CRC production] is very energy-intensive; so CRC prices tend to be more responsive to energy cost movements,” a buyer in Italy said.
Most EU mills use the batch annealing process to make CRC, with only three suppliers able to make CRC via continuous annealing, which is more energy-efficient.
In the meantime, some major European mills were said to have withdrawn their flat steel offers from the market, following recent developments.
“Major mills have withdrawn offers and have gone out of the market because they say the situation is not really calculable,” a source in Northern Europe said, adding that producers remained wary of rising costs for raw materials and energy.
Apparent demand has picked up recently, with steel service centers and stockholders returning to the market to secure flat steel tonnages, anticipating further price spikes. At the same time, there was no real improvement in consumption, market sources said.
Domestic market
In Northern Europe, domestic CRC and HDG prices increased in the week to Wednesday. Several suppliers were already sold out for May lead times for both products, Fastmarkets heard.
Fastmarkets’ weekly price assessment for steel cold-rolled coil, domestic, exw Northern Europe, was €785-790 ($913-919) per tonne this week, rising from €770-780 per tonne on February 25.
Deals were reported at €785-790 per tonne ex-works in Germany, with estimates of tradable levels reported at the same prices.
Domestic HDG coil prices also increased in Northern Europe.
Fastmarkets’ weekly price assessment for steel hot-dipped galvanized coil, domestic, exw Northern Europe, was €795-800 per tonne on Wednesday, up from €770-780 per tonne the previous week.
Deals in the region were heard at €795-800 per tonne ex-works during the assessment week.
Italy-origin HDG was offered to Germany at €820-825 per tonne delivered, but suppliers could offer only limited tonnages for export, prioritizing domestic bookings.
One supplier source in the Benelux area said that it was sold out for June-delivery coil as well.
In Southern Europe, prices for CRC and HDG also increased amid persistent supply tightness.
Fastmarkets’ weekly price assessment for steel cold-rolled coil, domestic, exw Southern Europe, was €805-810 per tonne on Wednesday, up from €770-780 per tonne the previous week.
The corresponding weekly price assessment for steel hot-dipped galvanized coil, domestic, exw Southern Europe, was €785-790 per tonne, rising from €775-780 per tonne in the previous assessment.
Some HDG suppliers in Italy were reported to have revised the list of extras for HDG material and were providing discounts on base prices “to stimulate buying activity,” a source in Italy said.
Import market
Meanwhile, import activity remained subdued across Europe – primarily due to current limitations posed by the EU’s Carbon Border Adjustment Mechanism (CBAM) and trade measures such as safeguards and anti-dumping probes, market sources said.
Most second-quarter shipment volumes from Brazil and Asia were said to have already been secured by buyers, while new offers were scarce amid new trade regime concerns.
“We do not know country-specific quotas yet, so booking imports for July delivery is very risky – we simply cannot estimate the final cost,” a buyer in Italy said.
Besides, the continuing geopolitical tensions in the Middle East have forced many vessels shipping from Asia to Europe to reroute around the Cape of Good Hope, extending transit times by roughly two weeks and contributing to tighter prompt availability of imports, notably from Asia.
Therefore, market sources said that new import offers of CRC and HDG were extremely scarce, due to CBAM’s effects, the Middle East situation and the continuing anti-dumping probe against CRC originating in India, Japan, Taiwan, Turkey and Vietnam.
“I have no new offers of imports this week, neither CRC nor HDG,” a trader in Italy said.
Fastmarkets’ weekly price assessment for steel cold-rolled coil, import, ddp Northern Europe, was €730-770 per tonne on March 4, stable week on week.
And the weekly price assessment for steel cold-rolled coil, import, ddp Southern Europe, was €730-780 per tonne on Wednesday, also stable week on week.
