The downturn in northwestern European coil prices since May is unlikely to be reversed in the coming months, as market activity slows during summer, market players say.
While mills’ offers for hot rolled coil are now seen at between €620/tonne ($708) and €640, sources in Germany as well as Austria see transaction prices at €615-630 delivered. This would bring the lower end of ex-works prices to €600.
Sources would not speculate if that mark will soften below €600, but expressed little hope for a recovery in the short term. A German source tells Kallanish he attended a meeting last week with a major mill group in Central and Eastern Europe, with all its representatives bemoaning the reservation of customers to make purchases.
A relative stabilisation might kick in around September, when imports could wane in view of the introduction of CBAM in January, he adds. The level of CBAM charge will not be determined until March, but will apply retroactively to earlier arrivals. This would be a risky game for third-country exporters and EU importers.
In Austria, offers from Italy do not differ much from those quoted by northwestern integrated mills, a local source says. Regarding cold-rolled and galvanized strip, he sees a solid premium of €90-100/t for CRC and of €110-120 for galv, due to the costs of extra energy required for the processes.
He points at the very high power prices in Austria, a point made also by voestalpine at its press conference last week, with a call to the government for support. The burden from raw materials cost has become lighter due to falling iron ore prices, its executives noted.
The overall price drop for coil products was anticipated by German analyst Peter Fertig, who foretold in late April a downturn by 6% till early June. He cited pressure from cheap imports, but also the influence of lower production costs. According to his calculations, margins for German mills improved six-fold in the first four months of the year, with lower production costs on one side and rising prices on the other.
Christian Koehl Germany
