Coil derivative prices are poised for a price increase, Italian re-rollers and service centres tell Kallanish.
Tube and sheet prices in Italy, along with other EU nations like France and Germany, have declined to “unsustainable” levels, say sources, jeopardising the financial stability of re-rollers and service centres. The upcoming derivatives price increases align with this week’s announcement from ArcelorMittal of a €40/tonne ($44.1) hike in European coil prices (see Kallanish 3 October).
According to multiple sources, similar price announcements for tube and sheet are expected in the coming days, after values have fallen below cost. “I believe we are at a pivotal moment. The coil increase is essential for restoring tube and sheets prices to a profitable level. October will see a gradual restoration of prices to sustainability. Values of coils have hit a significant low, while inventory levels of flat and re-rolled products are currently at a relative low point,” a tube producer says. He indicates apparent demand should recover this month.
According to a different source, end-users have been affected by the high financial costs of their stocks in 2024 and, as a result, they have concentrated on maintaining low inventories. Lower interest rates should boost end-user activity and reduce the pressure to maintain low inventory levels, while potentially higher steel prices could boost pricing lower down the value chain. Re-rollers indicate additional production rate reduction in the fourth quarter.
In September, demand for coil derivatives experienced a notable decline, with tube discounts peaking at 45-47 points. Buyers, including end-users and distributors, were careful in their purchasing decisions, fearing prices may continue to decline.
The announcement of ArcelorMittal’s coil price increase has been positively received downstream, as it presents an opportunity to strengthen prices downstream. Nonetheless, a number of coil buyers argue that any price increases will need corresponding production cuts to sustain them.
Currently, coil producers in Europe are not reducing output due to the potential loss of CO2 certificates. Beginning in the first quarter of 2025, EU producers will likely reduce their output, sources say. As of Monday this week, before the hike announcement, hot rolled coil prices in Europe averaged at €530-550/t, base ex-works, Kallanish notes.
Natalia Capra France