Marcegaglia sees bottom for European coil market

The European coil market is close to bottoming, Antonio Marcegaglia, chief executive of Italy’s Marcegaglia, said at the World Steel Dynamics European Steel Conference in Milan today.

Current production cuts of around 6mn t/yr are likely to have an effect on the market, alongside the definitive steel safeguard that will tighten availability of certain products, he said.

The European Central Bank is likely to provide money for fiscal stimulus through the raising of a eurobond, and it is up to national governments to use the money effectively, Marcegaglia said. Apparent consumption — which has been lower than actual demand for around four months — has scope to catch up, which alongside output cuts should support the market.

“I do not believe we have in front of us an easy time, but probably see more dark today than [there is] in reality,” Marcegaglia said.

Marcegaglia sees a place for hedging in the European coil sector, especially if there is a transparent and efficient market where the costs are right. The company is doing some trial hedging and sees a future for the market, he told Argus.

Marcegaglia made 5.3mn t/yr of finished steel last year, from purchases of 5.8mn t/yr. The company’s earnings before interest, tax, depreciation and amortisation margin will definitely be down from 8pc last year, he said, but added that its results will be more resilient than those of mill suppliers.