Marcegaglia: Real coil consumption to rebound from September

A slight downward price adjustment is seen happening for hot rolled coil and its derivatives, but there will be no drastic demand or price reduction, Antonio Marcegaglia, chairman of Italian re-roller and steelmaker Marcegaglia, told Kallanish on the sidelines of the Made in Steel tradeshow in Milan this week.

While European order intake is now going through a slow patch, particularly from the distribution sector, some service centres and re-rollers managed to achieve positive results in the first quarter. Marcegaglia grew Q1 shipments by 3% compared to Q1 2022 when record results were achieved.

European coil quota restrictions, logistics price increases and the slowing transport value chain, together with coil supply shortages from European producers, have pushed prices up. This has resulted in the current substantial spread between European coil prices and international values.

The gap between values in Europe and Asia is causing buyers to manage their purchases cautiously and adopt a wait-and-see attitude. The slow demand is seen lasting in the short term, with buyers expecting European prices to fall and narrow the gap to Asian quotes.

Chinese futures, as well as the physical market, have seen a positive albeit small rebound this week, which may signify that some Chinese and other Asian steel producers cut output instead of risking overcapacity and declining prices, Marcegaglia observed.

In Europe, the balance between stock management, and supply and demand is creating “mini-cycles”, he explained. Until July, Marcegaglia sees order intake continuing to be slow and the destocking process persisting due to uncertainty, but a more robust real demand should resurface in September. Although demand trends are mostly aligned in all European countries, Germany and northern Europe are showing stronger and more stable consumption compared to the more “nervous” and sensitive-to-price-change southern and Eastern European countries, the chairman said.

At present, Asian HRC offers into Italy for service centre material are at below €650/tonne ($713) cfr, with bids at €600/t cfr, while domestic HRC prices are at €810-820/t base delivered, Kallanish notes.

The best-performing downstream products, according to the re-roller, are heavy plate but also pipe for the energy industry. Europe is feeling the global slab supply shortage. Without Ukrainian and Russian slab and plate, European producers are enjoying more space in the market and high prices. Demand for plate in Europe remains strong thanks to infrastructure project investments. In the medium term, strong plate consumption is expected to be driven by European on- and offshore wind turbine projects.

Natalia Capra France