European steel CRC, HDG producers squeezed between low demand, high costs

Prices for steel cold-rolled coil and hot-dipped galvanized coil in Europe were stable or slightly weaker in the seven days to Wednesday September 13, despite producers’ attempts to push for increases because of higher costs, industry sources told Fastmarkets.

Slow demand and competitive import offers were the principal factors dragging on European domestic CRC and HDG prices, they said.

European mills were reported to be trying to get “some €20-30 [$21-32] per tonne” more for both products, but buyers were not accepting higher prices.

In Southern Europe, local producers were offering around €750-760 ($805-817) per tonne ex-works for CRC and €770-780 per tonne ex-works for HDG.

Mills in the region could mostly offer coil for November delivery, although some mills still had October delivery available, according to market sources.

Buyers, however, estimated tradable prices to be lower, at €730-740 per tonne ex-works for CRC and €750-760 per tonne ex-works for HDG.

“Demand is quite weak [for CRC and HDG] – trading is almost nil,” a trading source said. “Automotive demand is likely to dip further in the fourth quarter, and prices for HRC [the feedstock for CRC production] will remain under pressure, so I think we will soon see lower prices for CRC and HDG as well.”

European mills pointed out, however, that they could not reduce their prices by much, because the current values were already close to the cost line for them.

“Energy costs have risen again across Europe, and annealing [the heat treatment procedure for CRC production] is very energy-intensive,” a mill source in Southern Europe said.

For example, in Italy, electricity prices were €118.24 per MWh on September 1, but by September 13 they had climbed to €128.17 per MWh, according to Italy’s exchange for electricity and natural gas spot trading, Gestore Mercati Energetici (GME).

Fastmarkets’ weekly price assessment for steel CRC, domestic, exw Southern Europe, was €730-750 per tonne on Wednesday, widening downward by €10 per tonne from €740-750 per tonne the week before.

The corresponding weekly price assessment for steel HDG, domestic, exw Southern Europe, was €750-760 per tonne on Wednesday, down by €10 per tonne week on week from €760-770 per tonne.

Meanwhile, competitive offers from overseas suppliers were also dragging European prices downward. A transaction for South Korea-origin CRC with end-October shipment was reported at €660 per tonne CFR to Southern Europe during the assessment week.

A supplier from Japan was offering CRC for November shipment at $725 per tonne CFR to Italy.

And a Vietnamese supplier was said to be trying to achieve $830-840 per tonne CFR for 0.5mm HDG with Z100-120 coating, for November shipment.

Published by: Julia Bolotova