South Europe steel service centres expect price recovery

South European steel service centres are convinced that a recovery in coil prices will gain some momentum in the coming weeks. This is despite market uncertainty which continues to be a major feature of the sector, sources said during a recent meeting organised by their trade association EUROMETAL in Milan.

A senior market observer noted that the ongoing price recovery should continue until the end of the year, but any such developments in 2020 remain uncertain. “We are getting ready for a rapid recovery aimed at restoring a normal differential between coil and raw material prices. Having said that, first-half demand in 2020 is still not set to jump, so it is too early to say recovery will continue into 2020,” the source noted.

Another executive from an Italian service centre stressed that the market should have turned earlier, when mills clearly began to struggle to make any profit on their coil sales.

“It is interesting to notice that the current recovery is driven by scrap prices. Similarly, the last part of the price decreases we saw after the summer was driven by negative sentiment more than real demand,” another source noted.

According to Kallanish price series, Italian HRC prices have started to move up significantly during the last two weeks. Any recovery in transaction prices in northern Europe has yet to be confirmed.

EUROMETAL calculated that during the first nine months of 2019 steel service centres sales volumes overall in Europe were down by -4.1% year-on-year. The bigger drop was recorded in Germany, Benelux and Austria, where the fall was by -6.2% y-o-y. in Italy the on-year downturn in volume was only -2.7%.