Northwestern Europe coil market players would welcome a rebound in prices, but most are sceptical whether ArcelorMittal’s latest hike announcement will herald a market upturn.
The company is now asking for €590/tonne ($694) delivered for hot rolled coil, which it communicated to the market earlier this week (see Kallanish passim). According to a German service centre manager, the company’s previous basic offer stood at €560/t delivered, which he says could remain valid if the hike cannot be consolidated.
He points at quite a big pricing gap between mills, with some quoting at well below €550/t ex-works, while others have preferred to reduce output during summer, rather than contribute to the price deterioration. One other mill source with mostly long-term contracts confirms that “we have little interest [in the spot market] at these low levels”.
On the general sentiment of the market, most buyers state they do not see a recovery in demand, although they are hoping for it, and they believe mills are spreading unjustified wishful thinking. In the words of one Scandinavian wholesaler, “I do hear the word of rebounding demand and prices after the holiday, but nobody is saying why that should be.”
A Swiss-based trader concurs, stating that “consumer demand is really bad. And no light is in sight.” A Dutch buyer does not see a silver lining, either, given “still decreasing demand, although the mills have already limited their production.”
Mills have some reasons to be gently optimistic. An ArcelorMittal source points at lower interest rates that will help construction activity, and EU safeguards against imports that will be “drastic” and efficient. “The positives will come, it is only a matter of when,” the source adds.
These words were basically echoed by SSAB chief executive Johnny Sjöström during the firm’s earnings call this week. He referred to the many initiatives in Europe – safeguards, CBAM, interest rates, national incentives, action plans – which he is sure will bear fruit. “When the market comes back, it can happen fast,” he asserted.
The Swiss trader argues the opposite. “It is incredible how prices have weakened [since May], despite all these measures and plans,” he notes. An analyst at a German bank cautions that “steelmakers need to ‘talk their book’ in their own interest” but finds, too, that the “perceived reality” is less shiny.
Christian Koehl Germany
