Hot rolled coil prices have remained stable so far in May in the Iberian market. However, demand has failed to pick up due to buyers’ cautious stance, market sources tell Kallanish.
“Higher prices reflect increased costs resulting from the effects of the US-Israel-Iran war,” says one seller. “It is difficult to predict when the market will recover.”
According to another source, steelmakers are limiting production whilst attempting, albeit in vain, to secure higher prices for new contracts.
“HRC values have been stable for a couple of months now. The anticipated adjustment, which was expected to set the selling price at €800/tonne [$931.1], has not materialised,” he explains.
“Although we suppliers have accepted in recent weeks that we need to reduce our profit margins, consumers and the market in general seem to have reached a limit in terms of what price adjustments they are willing to accept. The pressure is now on the producers,” comments a distributor. Orders are currently limited to small-scale projects, he adds.
In addition to the effects of rising energy prices and the disruption to trade flows resulting from the conflict in the Gulf, the Spanish steel market is also concerned about the impact of the EU’s new steel trade regime from July.
“We are currently going through a period of difficult transformation in the sector. CBAM and the new protectionist measures will keep selling prices, which are already higher, considerably above those of imported goods. This, combined with rising transport costs, is significantly dampening consumer interest at the moment,” a market participant observes.
Despite the general optimism for a recovery in demand expressed during the recent Eurometal Steel Net Forum Iberia in Santander, most suppliers recognise that, in the short term, end-users will find it very difficult to prioritise value-added offers when making decisions about new projects. This is particularly the case if local steelworks are reluctant to make concessions.
Spanish HRC prices stand at €730-740/t ex-works. Distributors’ levels have surpassed €750/t delivered.
