Activity at flat steel service centres should improve as purchases will resume in the coming weeks for deliveries in the first quarter of next year, Italian steel trade association Assofermet forecasts in a report sent to Kallanish.
Current steel prices appear to have sunk below production costs. “It is implausible to expect further cycles of price declines” considering the resilience of raw materials prices, high energy and financial costs, the rising costs associated with “green” steel production and low capacity utilisation, as well as the strong limitations on imports.
The association notes the unusual “massive utilisation of the hot rolled coil quota” from European buyers last spring, coinciding with production shutdowns at several European steel plants. “By 25 July, the [September-]quarter’s quota was exhausted, and on 1 October, the opening day of the new quarterly quota, the quota was again immediately exhausted. This shows once again that the quota calculation by the EU Commission remains mismatched with the real needs of buyers,” the report states.
The outlook for the flat and long steel distribution sector is “stationary” for the short term. Distributors are continuing to report market weakness across all products. “Medium- and large-scale metal fabricators have some significant orders in their portfolios, but these are likely to be insufficient to properly face the next quarter, given the general uncertainty in macroeconomic trends that is leading large groups to procrastinate on investments,” the association says.
Attempts by steel mills to support prices have often failed due to the lack of downstream demand. Material availability remains at good levels even though some mills will implement shutdowns to tighten supply, Assofermet concludes.
Natalia Capra France