Welded tube values in Europe are set to increase, in line with higher contract prices and quotes for hot rolled coil.
Tube prices have increased compared to December, as discounts were reduced by 2 or 3 points in Western Europe, but the increases are slower compared to the price hikes seen for HRC. Re-rollers and distributors in Italy and France say that demand remains fragile from some sectors such as automotive and appliances where consumption is now considerably lower. Other sectors like construction and energy are performing better, Kallanish notes.
The tube price fall accelerated in December, bringing some values below sustainable levels. Over the past two weeks, however, in Germany, Italy and other European countries, prices have increased in line with hiking coil values and some need for restocking.
The level of discounts in Italy reached some 38-39 points last month and has now fallen to some 35-36, but tubemakers need to continue to push up their prices to ease the current margin squeeze. In Italy, they intend to recover 5 points in the second half of January, the equivalent of €70-80/tonne ($76-87), depending on product, and reach a level of discount of 30 points on average gradually by 1 February.
As some welded tube prices are unsustainably low, both producers and distributors are in need of increasing margins or risk stopping production lines to avoid selling at a loss. This year, re-rollers in Europe are dealing with high transport costs, particularly in Germany, France and Eastern Europe, following the increases implemented for railway freight and intermodal transport starting this month.
Energy prices remain an issue as some steelmakers and re-rollers are paying higher prices in the first quarter after their annual or six-month energy contracts expired in 2022. Uncertainty, longer lead times of now pricey coil and limited import offers are adding to the issue of high production costs.
Natalia Capra France