Participants in the closing panel discussion of Kallanish Europe Steel Markets in Vienna this week anticipated steel prices to pick up towards the end of the year. Their views however diverged on the degree of increase and what factors would play a crucial role.
The panellists were unanimous about the impact of EU trade measures on imports, including the Carbon Border Adjustment Mechanism (CBAM) as well as the new tariff rate quota system due from July. The effect will not be felt immediately, but likely after the summer break, when buyers will think about replenishing their inventories, said Philip Edmonds of M7 Metals. His guess is that by the end of the year, hot-rolled coil in Europe could reach €800/tonne ($925/t).
Alexander Soboll of Salzgitter Mannesmann, in principle, agreed with Edmonds’ view that buyers will evaluate their stock levels in September, but said he is more conservative, expecting €750/t. In particular, he warned that mills might revive capacities they had ramped down, which would undermine efforts to stabilise prices.
The argument was picked up by Kamal Arifi, director commercial transformation at SSAB Europe. If European mills reactivate more capacity than now, “we will lose the benefits we get from the safeguards”, he noted.
In that regard, Edmonds is more optimistic. “I think EU mills will be disciplined. They are much better at getting €100 more per tonne than producing another half a million tonnes,” he said.
Another factor was pointed out by Emanuele Norsa of Siederweb: scrap prices, which he finds are too low and not correspondingly aligned with steel prices.
“We need first to see scrap pick up more. The differential at this moment is too big,” Norsa said. In his assessment, HRC prices at year-end will be between €700/t and €750/t, “but not higher”.
