European stainless steel prices down on low demand, production cuts
Fastmarkets’ monthly price assessment for stainless steel cold-rolled sheet, 2mm, grade 304, transaction domestic, delivered North Europe, was €2,600-2,650 ($2,824-2,879) per tonne on Friday, narrowing downward from €2,600-2,780 on October 4.
Three major European stainless steel mills confirmed to Fastmarkets that they had revised their production volumes for the fourth quarter, with another market source saying that others had made similar decisions.
“Demand is virtually gone, but the reduced output has helped to keep prices stable,” a trader source told Fastmarkets.
“The mills are trying to keep prices alive, but in the long term it doesn’t seem viable, price-wise,” a second source told Fastmarkets. “I expect [there to be] a drop in prices as early as the first week of November, and it could continue through to the end of the year.”
Another factor that played a role in mills’ decisions to reduce output was the expectation of increased imports of Taiwanese and Indonesian material, which were possible due to the EU import quota being reset for the fourth quarter.
“Even with [anti-dumping and anti-circumvention] duties, Taiwanese prices are much lower. If the price difference is too big, it still makes sense for them to sell in Europe,” a third trader told Fastmarkets.
“I think the import quota reset has played a part when talking about the reduced output, for sure,” a fourth source told Fastmarkets.
The alloy surcharge for grade-304 material rose on Friday.
Fastmarkets’ monthly assessment of the stainless steel cold-rolled sheet, 2mm, grade 304 alloy surcharge, domestic, Europe, was €2,077-2,114 per tonne on November 1, up by €91-114 per tonne from €1,963-2,023 per tonne a month earlier.
The assessment on September 6 was €1,999-2,051 per tonne, down by €109-111 per tonne from €2,110-2,160 on August 2.
Another factor that affected the price of stainless steel flat products in October was the slower fall in the price for stainless scrap. Fastmarkets’ weekly assessment of the price for stainless steel scrap 18/8 solids, import, cif main European port, averaged €1,162.50 per tonne in October.
This continued the downward trend that started in May-when the average was €1,430 per tonne.
Zdravko Cherkezov Sofia contributed to this story.
European HRC prices remain largely flat despite bullish sentiment at producers
Fastmarkets calculated its daily steel HRC index, domestic, exw Northern Europe at €540.83 ($596.68) per tonne on Friday, down by €1.67 per tonne from €542.50 per tonne the previous day.
The index was down by €4.38 per tonne week on week and by €49.17 per tonne month on month.
Trading remained quiet in the region. Buyers questioned the recent price increase announced by a leading European producer earlier in the week.
“The market cannot accept [€590 per tonne as a base price for HRC]. Demand is not strong enough to support that rise,” one buyer source told Fastmarkets. “But it was clear that prices [for HRC] have fallen below costs for European mills.”
Buyers estimated tradeable values at €520-540 per tonne ex-works on Friday.
One buyer estimated achievable prices in the range of €510-520 per tonne ex-works, but market sources said that mills were unlikely to accept such low prices.
One integrated steelmaker in the Benelux area was offering HRC at €540 per tonne ex-works, but trade sources said that the mill was also considering a price rise, following the move by a market leader.
Market sentiment would become clearer in the week starting October 7, industry sources said, when public holidays in Germany and in Asian countries were at an end.
“I think, price-wise, we are currently at rock bottom in Europe,” a second buyer said.
“It is clear that [EU mills] will still accept lower prices for fourth-quarter-delivery HRC,” a third buyer said. “The price increase from [the leading European producer] helps to stabilize the market, but [I am] not so sure about actual price rises when demand is so low.”
In Southern Europe, Fastmarkets’ daily steel HRC index, domestic, exw Italy was €535.00 per tonne on Friday, unchanged from the previous day.
The Italian index was down by €6.67 per tonne week on week and by €55.00 per tonne month on month.
Buyer estimates for the workable market price were €520-540 per tonne ex-works, while the majority of sources estimated the market at €530-540 per tonne ex-works on Friday.
One integrated Italian supplier withdrew its offers from the market earlier this week and was expected to come back with new prices.
“After [the European producer’s] price rise this week, other producers also withdrew offers and [were now planning] price rises. We will see how the market reacts,” a buyer in Italy said.
As for imports, the markets have remained quiet due to public holidays in Asia. But market sources suggested that imports would remain uncompetitive in Europe because of trade restrictions, long lead times and the small gap to European prices.
“We do not have new offers from Asia, but China has become more bullish after a stimulus package was announced so we expect higher offers,” a second buyer said.
EU coil mills try for fourth-quarter increase
The major integrated coil mills in northwestern Europe are attempting higher prices for deliveries as of October, market participants tell Kallanish.
Some mills are now targeting offers of €660/tonne ($721) ex-works for hot rolled coil. The price point appears fair, as it means a customarily cautious €30 hike over the €630/t that mills have been able to achieve at best in summer so far.
The new offer price would be valid immediately, as orders now would mean rolling and delivery in October, according to a service centre manager.
Mill sources had told Kallanish in June that any price increase attempt in summer would be hopeless, but that a hike will be necessary come September. The new offers have come sooner than expected, probably to cover all deliveries in the fourth quarter.
A manager at a German cold-roller company, who only buys on long-term contracts, has heard of the offer increase and finds it reasonable. “Of course, going for €100 more or so is absolutely out of the question. So, mills are testing the willingness of buyers modestly,” he notes. He believes mills are banking on lower pressure from imports after the latest safeguard adjustments and EU HRC anti-dumping duty probe initiation.
For some two months, HRC prices from major mills were locked at around €620/t, rarely more. Lower transactions were heard quite often, which appears logical, as lulled activity normally forces sellers to make further price concessions. The value of €615/t was heard frequently over recent weeks. A low was reported from the Netherlands at €605/t, but sources doubt this is a representative sustained value.
Christian Koehl Germany
EU Flat Steel Summary by Argus Media
Northwest European hot-rolled coil prices edged up over the past week, but there is much uncertainty over real consumption over the rest of the year.
Argus’ daily northwest European HRC index was €632.50/t on 23 August, up €3.25/t from 6 August. In Italy activity is only just restarting after the summer break, with many participants still out on holiday. Argus’ daily Italian HRC index slipped from €631.75/t on 16 August to €630.25/t on 23 August.
One Italian mill has still been offering September delivery coil at €640/t delivered base to some service centres in the past week. This has spooked some, given September is not far away. Shorter lead times make it harder to mills to remain firm on price.
One leading European producer has announced €700/t ex-works to some customers in the last few days, although it is not necessarily a unified offer just yet. Other steelmakers are expected to table higher quotes in response.
However, demand is the big concern.
Service centres in Germany and Italy report low appetite from end-users, with some buyers cutting their volume budgets by 20-30pc. As a result coil stocks are starting to increase with German service centres, despite their destocking attempts amid high financing costs. The stock-to-sales ratio for cold-rolled coil reached three months in July, the highest level since last December.
Even steelmakers concede there has, as of yet, been little sign of any September restock. But they hope the increase announcements spark some apparent demand, prompting a stronger buying cycle.
Italian stainless coil orders pick up
Italian stainless steel coil prices are increasing after values reached rock bottom in July. European producers are hiking by approximately €100/tonne ($109) and contracted prices are seen rising accordingly in September for hot and cold rolled coil for October delivery, sources tell Kallanish.
Much of the market is now on holiday in Italy and in other European countries. Italian mills’ order intake improved in July and the first days of August. This follows a long period of quiet activity and contracting orders. Local service centres have bought some volumes for July, August and September delivery, while some deliveries are being delayed due to the August production stoppages.
At present, asking prices for October-delivery stainless CRC in Italy are at €2,300-2,350/t delivered on average, and some €150/t less for HRC. CRC with trimmed edges is transacting at about €2,200/t delivered, with HRC at about €2,000-2,050/t delivered, sources suggest.
Two Italian buyers say prices will have to increase for coils and derivatives in September but volumes will remain limited. Service centres’ clients are reported to have some work, but their activity remains low. Purchases in September should surge for October deliveries, owing to market seasonality. At present, however, distributors are reporting a low level of orders and a continuing wait-and-see attitude.
Natalia Capra France
German coil market sees some bottlenecks
Coil buyers in Germany say they have experienced some shortages in recent months. These were nevertheless confined to local suppliers serving high-standard applications and may not have been widely heard in the overall sluggish commodity market.
One player is SSC Becker, Germany’s largest service centre, which has been suffering from hurdles launching the new ERP (enterprise resource system) it introduced in spring. “This has influenced our deliveries, which we regret very much. We kept informing our customers in the interest of a trust-based relationship,” the company tells Kallanish.
Meanwhile, a task force of IT, sales and logistics has worked intensely to overcome those issues. Deliveries are now nearing the volumes they saw prior to the ERP launch, Becker says. However, it also mentions shortages it is experiencing as a buyer, due to insufficient delivery performance by its suppliers.
According to another observer, this points to one mill that declared force majeure in June after heavy rains, but was apparently already struggling with meeting targets before that. “They [the mill] thought they could produce at full capacity, which did not work, so they had to turn down orders in order to return to normality,” he says.
Still, this mill’s case of force majeure was justified, unlike that of Tata Ijmuiden, which was declared for technical shortcomings, he claims. He adds that his company is still in negotiations with Tata about the resulting cancelled volumes. “You do have to concede some loss in such cases, but we solved most of it by negotiating,” he says.
Observers also suggest that ArcelorMittal exaggerated the damage resulting from accidents at some of its mills in Europe, taking it as a welcome argument to keep production down amidst a sluggish market.
Christian Koehl Germany