Europe’s apparent demand for flat steel to grow only marginally in H2, ArcelorMittal says

ArcelorMittal expected that apparent demand for flat steel products in Europe would grow only by 0-2% by the end of 2024, the company said in its financial report for the second quarter of the year, published on Thursday August 1.

Although ArcelorMittal confirmed that destocking would not continue this year, after having a negative effect on apparent demand in 2023, the company downgraded its previous forecast. Apparent demand was now expected to increase by 2-4% in 2024.

“Because absolute inventory levels remain low, particularly in Europe, the company remains optimistic that restocking activity will occur once real demand begins to recover,” ArcelorMittal said.

But it expected a decline in real demand from both the automotive and the machinery industries in Europe by the end of the year.

ArcelorMittal added that current market conditions were still unsustainable, with European prices being below the marginal cost.

According to the company’s data, the average steel selling price in Europe dropped by 1.7% to $929 per tonne in the second quarter, compared with $945 per tonne in the first quarter of the year.

Fastmarkets’ daily steel hot-rolled coil index, domestic, exw Northern Europe, also showed that, after the short-lived rebound of apparent steel demand in January-February 2024 related to restocking, market activity deteriorated, with prices for such material under pressure.

For example, in March, the price for HRC in Northern Europe averaged €691.99 ($748.99) per tonne, compared with €731.73 per tonne in January.

The average price for the material in June was even lower. at €632.65 per tonne. The negative trend seemed to be continuing in the third quarter, with the average monthly price of HRC in July at €629.12 per tonne.

But according to Fastmarkets’ sources, a degree of price rebound, mainly driven by restocking, could be seen in the fourth quarter of the year.

ArcelorMittal Europe’s key indicators
ArcelorMittal’s crude steel production from its European operations reached 8.04 million tonnes in the second quarter of 2024, compared with 7.60 million tonnes in the previous quarter.

The company’s steel shipments increased in the second quarter to 7.41 million tonnes, from 7.24 million tonnes in the first quarter.

Sales in the second quarter were largely stable at $7.82 billion, compared with $7.85 billion in the previous quarter.

“[This was] primarily due to improved steel shipment volumes, particularly for long steel products, which increased by 13.7%, offset by the 1.7% decline in average steel selling prices,” the company said.

The operating income of the European division of the company reached $194 million in the second quarter of the year, compared with $69 million in the previous quarter.

ArcelorMittal said that the improved financial result was due to the positive price-cost effect. The company added that it had managed to achieve a significant reduction in costs, enough to compensate for the lower steel selling prices.

Another factor was the higher steel shipments.

Consequently, ArcelorMittal Europe’s earnings before interest, taxes, depreciation and amortization (Ebitda) reached $462 million in the second quarter, up by 34.8% compared with the previous quarter.

Sustainable development
ArcelorMittal was expanding its interest in sustainable development, with the company now focusing on the production of hydrogen transport pipelines and solutions for low-carbon emissions buildings, the financial report said.

The company has launched a new steel brand for hydrogen transport pipelines, HyMatch®, which was intended to support the implementation of hydrogen infrastructure globally. The HRC used to make these pipes was being produced at Fos-sur-Mer, France, and Bremen, Germany, a company spokesperson told Fastmarkets.

Asked whether the pipes under the new brand would be green steel products, the spokesperson explained that HRC supplied by ArcelorMittal Europe Flat Products had an embodied carbon footprint of 2.23 tonnes of CO2e per tonne of steel, calculated according to the ISO 14025 and EN 15804 standards. XCarb® steel certificates reduce this CO2 effect by 2.1 tonnes of CO2e per tonne of steel.

“The EU has high ambitions for the production of green hydrogen [10 million tonnes by 2030], so it is reasonable to expect that there will be significant and growing demand in the coming years,” the spokesperson added.

According to the spokesperson, there was significant interest among customers for HyMatch steel because there were more tenders for pipeline projects requesting compatibility with the transport of hydrogen.

Hydrogen was expected to be the fuel of the future, and would help steel producers to decrease their carbon emissions significantly. But investments in hydrogen transportation infrastructure have yet to be made.

ArcelorMittal has also acquired Italian and Spanish businesses called Italpannelli, the company announced. The move was expected to build on ArcelorMittal’s exposure to insulation panels for low-carbon emissions buildings. The acquisition would also help the company to expand its current offerings in that field under its Steligence brand.

Expansion in the field of low-carbon emission buildings was expected to boost the demand for green long steel products, which currently lags compared with the demand for green flat steel, trade sources told Fastmarkets.

ArcelorMittal added that the construction of its 1.1 million tonnes per year electric-arc furnace (EAF) in Gijón, Spain, has started. The project was part of the company’s decarbonization program, with the new EAF expected to become operational in 2026.

Published by: Darina Kahramanova

fastmarkets.com