Service centres are losing money in the first quarter after the negative market performance of the second half of 2023. They are now receiving coils bought at some €760-770/t base delivered, leaving them with no margins on sales considering the descending value of sheet.
Pickled sheet prices are currently at below €800/t ($875) ex-works, hovering at €780-790/t, with hot rolled sheet at about €30/t less. Coil service centre customers in the heavy machinery industry are ordering back-to-back and only “tiny” volumes, sources say. They are also reporting no margins and slow demand downstream. Some are said to have cut output by 30%.
The white goods sector’s consumption continues to be weak and has a negative outlook for H1 2024. A source says that banking on the exceptional results seen in 2021 and 2022, several metal processing companies invested in personnel and equipment to maintain output. Unable to reach their objectives, these companies are now suffering financial losses, driven by lower consumption and prices. This results in service centres receiving fewer orders and having to cut output.
Meanwhile, hot rolled coil prices continue to decline as steelmakers lament low sales volumes. In Italy, HRC is now hovering at €680-690/t base ex-works, sources say.
Natalia Capra France
