Italian welded tube prices are seen increasing in September, in line with the expected increases in coil values. The welded tube market remains subdued, with demand weak and prices depressed in most European countries, sellers and buyers tell Kallanish.
Tube values continue to lag behind hot rolled coil tags due to weak downstream demand. Uncertainty is dominating the market, which is now quiet due to the August holiday break. Discounts remain at 37-39 points, with purchases implemented only back-to-back and prices unsustainable compared to processing costs.
Commodity grade 40x40x3 product remains at €800/tonne ex-works, which provides practically no margin. While some positive signals are coming from the automotive sector, many other industries are ordering low volumes and distributors are keeping stocks low. Tube sales in July and the first week of August are reported to be weak with no significant restocking occurring.
The Italian and European HRC market is however forecast to become livelier in September and prices to increase, pushed up by the exhaustion of EU import quotas. Third-quarter quotas from Vietnam, Indonesia and other Asian countries are already exhausted, while few tonnages remain from Korea. Buyers can import only from Turkey, whose suppliers are offering higher prices, as well as from India.
HRC buyers say Korean suppliers will give no allocations to Italy for Q4 and new import quotas will expire on 1 October, the same day as they are renewed. Amid the general downturn of the steel sector in Europe, this seems the only good news for September, and both coil and coil derivative prices are seen increasing, albeit gradually. The market remains fragile. Downstream demand and consumer confidence are seen remaining weak, with no surprises until the end of the year.
The target for re-rollers is to reach 35 points for tube discounts. Sources see September HRC prices at €700/t ($766) base ex-works.
Natalia Capra France
