Final long-term EU coil contracts eye settlement
The negotiations for annual supply relationships between European coil mills and large consumers, mostly in the automotive sector, have now largely been settled, with few still outstanding.
Most agreements were struck shortly after the winter break. By mid-December, one mill source said that agreements would not be completed before January, at least not with the big consumers. Smaller customers, such as service centres, had already spoken of finalised deals in early December.
Meanwhile, the mill source informs Kallanish that some annual and half-year agreements have been settled. “For the remaining contracts, the negotiations are in the final stage where the window between customers’ and mills’ expectations has narrowed down to around €10-20/t [$11-22],” he notes.
This is a noteworthy approximation, given that customers had initially asked mills to reduce their prices by over €100/t in comparison to the prices secured one year earlier.
Amid an already pitiful spot price environment, with sales volumes significantly restricted for several months now, big year-on-year annual contract price declines would have meant another blow to the profitability of mills. In December, many sources already reported increasing willingness by customers to make do with more modest reductions, as it would make little sense to starve their established suppliers.
According to the mill source, deals were now struck at a y-o-y reduction of €60-70/t, a figure confirmed from the side of automotive suppliers. One buyer tells of a reduction range struck with tier suppliers as well as with OEMs of €50-70, “with slightly more [deals] towards the higher end.”
He notes that deals with most mills have been completed, except for one group, “which is still playing hard-to-get, but they will be inclined to go in that direction, too”.
European HRC Market faces uncertainty amid weak demand, inventory overhang
Domestic European hot-rolled coil prices remained largely stable Jan. 8 as participants grappled with subdued demand and elevated inventory levels. The market’s cautious sentiment is reflected in the mixed pricing signals and the ongoing hesitancy among buyers.
A trader source observed a lack of engagement in the HRC market, where offers around Eur630/mt ex-works Ruhr have been reported, though these figures remained largely unworkable across the broader market.
“The market is constrained by weak demand and substantial inventories, which are dampening transactional activity,” an Austrian source said.
A Germany-based distributor source expressed skepticism regarding the current HRC offer levels from domestic mills, suggesting that realistic, workable prices are closer to Eur540-550/mt, influenced by the persistent low demand.
Platts assessed North European HRC prices at Eur560/mt ex-works Ruhr Jan. 7, stable on the day. Similarly, Southern European domestic HRC prices held steady at Eur560/mt ex-works Italy.
Interest in imports remained weak, with the source noting that import offers are not generating significant interest, as buyers remain cautious about committing to new bookings.
Imported HRC prices in Northwest Europe increased Jan. 8 to Eur535/mt CIF Antwerp, while prices in Southern Europe remained stable on the day at Eur530/mt CIF Italy.
Discussing the market interest in carbon-accounted steel, participants continued to report a wider range of offer levels in the market, depending on carbon content. A range of offers for carbon-accounted HRC was heard on the day, with the most competitive at Eur60-70/mt, CO2e content below 0.8 mt, scopes 1-3, for mass-balanced material.
Higher offers were also heard in the market at Eur120/mt with CO2e content below 0.8 mt across scopes 1-3 and at Eur300/mt for CO2e content around 0 mt across scopes 1-2, but using mass-balancing approach, However, sources remained skeptical that these price levels were workable for the wider market, instead citing that due to both higher prices as a result of the lower carbon content, the material would only attract niche buyers or be required for special projects applications.
Platts assessed Northwest European hot-rolled coil carbon-accounted at Eur620/mt ex-works Ruhr Jan. 8, stable day on day.
European HRC prices flat in quiet market
Sources said the increase in trading activity was not due to improved demand or an economic upturn, but due to expectations of longer lead times at some suppliers.
“Some steelmakers will extend their winter break, which will lead to longer lead times [for HRC],” a buyer in the Benelux region of Northern Europe told Fastmarkets.
Offers for HRC with lead times in the first quarter 2025 were heard at €570-600 ($598-630) per tonne ex-works in Northern Europe on Friday, but sources said there was “no information about contracts starting with a ‘6’ so far.”
One supplier in the Benelux region reported hearing of deals for HRC being done at €570-580 per tonne ex-works.
A supplier in Germany, meanwhile, said deals had been done at €560-570 per tonne ex-works.
Buyer estimates of the tradable level in Northern Europe were heard at €550-580 per tonne ex-works on Friday.
“The market mood is rather depressed, especially in Germany, where many companies are announcing staff lay-offs,” a source in Germany said.
And there was said to be fierce downstream competition between steel service centers (SSCs) because of high inventories and cashflow needs.
“There is a battle for orders between SSCs,” a third buyer said.
Fastmarkets calculated its daily steel hot-rolled coil index, domestic, exw Northern Europe, at €562.50 per tonne on December 13, down by €0.63 per tonne from €563.13 per tonne on December 12.
The index was down by €1.67 per tonne week on week but up by €4.17 per tonne month on month.
No major progress was reported regarding the long-term contracts negotiations between steel mills and automakers
Buyers were hoping to achieve a discount for first-half and full-year 2025 contracts, with several original equipment manufacturers (OEMs) reporting a targeted decline of €100-150 per tonne.
Mills were hoping for a “double digit” discount, Fastmarkets understands.
“Mills have to keep in mind that the price gap between spot and contract prices is too wide right now,” a fourth buyer told Fastmarkets.
Contracts for the second half of 2024 were done at €730-750 per tonne, sources said.
“We are in the middle of negotiations with the OEMs. [Contract] prices for HRC will be lower [than] 2024, but not by as much as initially expected,” a mill source said.
“Negotiations [with the automotive sector] are very difficult and might extend into January,” a mill source said.
In Southern Europe, meanwhile, Fastmarkets calculated its daily steel hot-rolled coil index, domestic, exw Italy, at €561.50 per tonne on Friday, down by €0.38 per tonne from €561.88 per tonne on the previous day.
The Italian index was up by €1.08 per tonne week on week and up by €7.50 per tonne month on month.
One local steelmaker in Italy was aiming for €600-640 per tonne delivered (€590-630 per tonne ex-works) for February-March delivery coil, sources said,
depending on the tonnage and client.
One integrated mill in Italy raised its offer prices for first-quarter delivery coil to €570 per tonne ex-works, compared with €550 per tonne ex-works at the start of December,
Buyers, meanwhile estimated the tradable base price for HRC at €570-580 per tonne delivered (€560-570 per tonne ex-works).
The market for imported coil in Europe remained quiet in the week to Friday due persistent trade restrictions, long lead times and uncompetitive prices compared with European suppliers.
“We expect reliance on European material will only increase in the upcoming months,” a buyer in Italy said.
Turkish suppliers were offering HRC at €550 per tonne CFR, duty paid, for tonnages of 10,000 tonnes or more, sources said.
And offers of HRC for February shipment from Southeast Asia to Italy came in at €580-600 per tonne CFR in the seven days to Friday.
EU HRC prices rise, supported by weak import market
Domestic European hot-rolled coil prices rose slightly Oct. 31, as weak import market demand continued to boost the performance of domestic European mills.
Rumored production cuts by mills due to maintenance works are likely to support prices, an Italy-based trader said. Weak demand forecasts for 2025 are expected to factor into mills’ decisions to reduce capacity, the source added.
“Now, there is no demand and there is no money from government(s) supporting the economy like they did in 2020-2021 in the COVID Crisis,” said a Germany-based trader source of the current market situation.
A Germany-based distributor source said that there was no pressure to reduce prices despite low consumption in the European market.
Platts assessed Northwest European HRC at Eur570/mt ex-works Ruhr Oct. 31, up Eur10 on the day.
Offers were reported at Eur600-640/mt EXW Ruhr. Tradable values were at Eur580-590/mt EXW Ruhr.
Platts assessed domestic HRC in Southern Europe at Eur555/mt EXW Italy, stable on the day.
Many market participants remained unwilling to bear the risk of purchasing imports due to CBAM regulations, quotas, antidumping investigations, and retroactive duties on steel arriving this year, according to a Germany based distributor source.
Platts assessed imported HRC in Northwest Europe at Eur515/mt CIF Antwerp, stable on the day.
Platts assessed imported HRC in Southern Europe at Eur535/mt CIF Italy, stable on the day.
European HRC market remains stable amid muted activity
Domestic prices for European hot-rolled coil remained stable on Sept. 12, on muted market activity as buyers remained cautious amid expectations of further decreases in prices later in the year.
Additionally, prices seemed to be experiencing more of a downward pressure within Northern Europe amid worsening macroeconomic factors, while Southern Europe remains relatively stable, sources said.
“Booking prices dropping further down,” a distributor source said. “Seems Southern Europe is doing better than Northern Europe right now.”
Sources noted that many consumers were holding off buying any more material in the hopes that prices continued to become more favorable towards the end of the year. Additionally, inventory levels remained high, further dampening demand for domestic material.
“We need to follow booking prices carefully,” the distributor source said. “Customers are still looking where prices are bottoming.”
Platts assessed Northwest European HRC at Eur565/mt ex-works Ruhr on Sept. 12, stable on the day
Offers were reported at Eur570/mt EXW Ruhr.
Meanwhile, Platts assessed domestic HRC prices in Southern Europe at Eur570/mt EXW Italy, stable on the day.
Tradable values were reported at Eur570-575/mt EXW Italy.
Platts assessed imported HRC in Northwest Europe stable on the day at Eur559/mt CIF Antwerp and imported HRC in Southern Europe stable on the day at Eur555/mt CIF Italy.
Regarding green steel, prices in Europe continued to fluctuate, particularly as consumers were hesitant to purchase new material at a premium compared to conventional steel.
Faced with the existing pressure in the coils market, green steel has also struggled to attract the necessary demand, especially for the automotive industry, which is facing increasing costs and a lull in demand. As a result, prices for green steel could differ significantly.
“The exact premiums can vary,” the distributor source said. “[It can be] based on demand and regional factors.”
Platts assessed carbon-accounted HRC Ruhr at Eur660/mt EXW Ruhr, stable on the day.
Geraint Moody | Devbrat Saha
Northwest European coil market deems price hike unlikely
Despite efforts by mills last month to bring coil prices up somewhat, the prices paid on the market have, in fact, continued retreating.
Some European mills were trying to increase their prices by €20-30/tonne ($22-33), “but in reality, prices are getting more and more downward pressure. There is still too much material around, and demand is not in balance with supply,” a buyer at a Dutch steel user tells Kallanish. “I do not see any clear signals that the European market will improve in the next weeks.”
Transactions are now frequently undercutting the mark of €600/tonne ($667) for hot rolled coil. Another Dutch source assesses the range of spot market prices within the EU for HRC, at between €580/t and €620/t, “depending on volumes, region, quoting mills and desired lead time”, he points out.
Lead times can be extraordinarily short these days. “Four to six weeks is possible, but even sooner if required,” the Dutch buyer says. He expresses sympathy for the mills’ ongoing suffering and notes they are very accommodating as they are vying for the sparse order volume on the market.
Meanwhile, a Belgium-based trader tells of comments he hears from Poland. Customers there are even expecting that mills will lower their prices for October. It is not quite clear if that would apply to Polish/Central European mills, or also to close-by German mills. “But I am sure that will not be their [mills’] official statement,” the trader says.
Christian Koehl Germany
