Italian plate producers seek increases
Italian heavy plate producers are increasing prices by €30/tonne ($32) compared to last month for S275 and S355 grades. Sources tell Kallanish the market is quiet due to the sector’s August hiatus.
Local re-rollers are requesting €700/t ex-works for S275 grade and approximately €730-740/t for S355. Last month, they made significant efforts to lower their prices, resulting in import offers no longer being competitive.
According to a mill source, prices have hit rock bottom and are expected to rise in upcoming contracts. Given the current cost of production and imported slab values, it is evident that July contract prices are not sustainable for producers, as they are operating with minimal profit margins. Certain producers are starting to reject selling at the low levels seen in July.
During July, customers of all sizes showed a reluctance to make purchases, and sales volumes have been consistent but low. Various buyers took advantage of competitive import prices in June, resulting in a decline in local sales volumes. Last month, the cost of Asia-origin material was at around €600-620/t cfr Italy.
According to information from distributors, there is a continued stagnation in demand downstream. The current booking price for Asian slab is at approximately $550/t cfr Italy. However, for larger volumes, there are discussions about a slightly lower price of $540/t cfr. As of now, domestic S275 grade transactions are taking place at approximately €650-660/t ex-works in Italy. S355 is meanwhile being traded at around €680/t, sources suggest.
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Assofermet: Italian service centres report negative first half
Italian service centres’ sales volumes for the first half of 2024 were about 15% lower compared to the first half of 2023, Italian steel trade association Assofermet says in its market note monitored by Kallanish.
The negative trend can be attributed to persistently unsustainable prices and low margins. June saw an overall decline in demand, a situation that has been ongoing for an extended period of time.
Some end users are expressing interest in negotiating supply for the fourth quarter of 2024 and the first quarter of 2025. Their goal is to secure the current low level of quotes for these periods.
“Maximum attention is now being paid to the consequences of the amended version of the [EU] safeguard … This change is set to dramatically impact the flows of this raw material [hot rolled coil] … Our concern focuses … on the lack of availability of the raw material and the consequent difficulty in maintaining stocks at an adequate level to meet the demand from end users. This adds to the inevitable price increase that EU producers will charge, due to the reduced import capacity,” Assofermet warns.
Production shutdowns at EU steel mills in August will be extensive. This is likely to strongly penalise the downstream segment. Despite the ongoing crisis in consumption, service centres will have to accept significant price increases for steel in order to maintain production and fulfil orders. “This may result in a loss of competitiveness in international markets,” the note states.
The distribution segment is facing a tired market and low visibility. Volumes for flat products are reported to be stable, while those for beams, which typically experience a surge during this season, are currently on the upswing. Finished product demand is stagnant in general but steel prices have remained relatively stable over the past few weeks.
July is expected to be a challenging month in terms of demand and price levels due to the extended closures announced by several steel mills leading to a potential shortage of certain products, Assofermet concludes.
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Assofermet Steel Market Note – May 2024
Carbon Flat Steel Service Centers
April was subdued in terms of volumes sold, even though there was greater buying interest from a number of specific buyers.
Although the period was characterized by a slowdown in business due to many holidays in Italy and central European countries, some positive signs came from those very end users who, driven by the rebound in coil purchase quotations, decided to cautiously cover their sheet and strip needs for the coming months.
Service centers were caught in the stranglehold between producers and consumers, in a market characterized by uncertainty. They have continued to operate under declared insufficient operating margins.
The recent increases in purchase quotations, confirmed by both EU and non-EU mills, added to the import limits imposed by the Safeguard Measure, erga omnes duties and the effects of the CBAM, are pushing distribution and pre-processing operators to change pace by following and reinforcing the upward path of their sales quotations, already undertaken in this first decade of May.
Raw material stocks, available at service centers, appear to be slightly above average due to the slowdown in sales estimated at about 10 percent in the first quarter.
The overall situation may not be a problem today since, as mentioned, quotations appear to be on the rise.
Even tough the conflicts in Ukraine and the Middle East are bound to still impact world economies, some signs of optimism are coming from the EU for the long-awaited and announced round of lowering the cost of money, which is expected to finally begin in June.
Stainless Flat Steel Service Centers
April saw improving demand accompanied by low supply caused by strikes at two major European producers in Finland and Spain and limited imports. The strike at the Spanish producer is still ongoing and has now lasted for more than three months.
The month of May opened with lower demand and new demands for increases from producers.
The EU commission, after a nine-month long investigation, has also just published the anti-circumvention regulation regarding cold-rolled imports from Taiwan, Turkey and Vietnam, confirming the exemption of major producers in these countries.
The decision is welcomed and will make the market better balanced, guaranteeing room for imports by producers while blocking duty-evading operations.
Steel Warehouses
In April weakness remains in the downstream market, that does not seem to want to restart on last year’s volumes. Prices, for which the reversal point was supposed to have been reached, also show no signs of recovery.
Both the flats and the longs, while without any collapse or exceptional movement, left a few cents on the ground throughout April.
The much heralded rebound, however, seems to have taken shape in the first days of May, with volumes in line with 2023 and with noteworthy increases on the price side, both in the flat world and, finally, in the long world.
Whether the premises, will solidify into a real recovery will depend, as usual, on numerous endogenous and exogenous factors.
The ECB seems ready to cut the official discount rate next month, but rumors no longer speak of a downward ride, as was feared at the end of last year, and it is likely that the May rebounds are already the result of the announcement of the June reduction.
Of course, the unfolding of the war in Ukraine, the outcome of which seems increasingly uncertain as time goes on, is certainly not helping markets to enter a phase of stability that would do so much good for the macroeconomic situation.
Flat Tinplate Steel Service Centers
Discreet turmoil on demand for ready material, both due to elongations in lead-times of European ironworks reported up to 14 weeks (as opposed to the usual 7-8), and a price increase of several tens of euros, indicating the expected reaching of the bottom. On the import side, a recovery in quotations is also denoted, supported by the further increase in logistics costs.
May 2024 Steel Market Note – Assofermet
Italian mills cut rebar prices again
Italian longs producers cut prices this week, amid the weak construction season and tepid global market recovery.
Argus‘ weekly Italian rebar assessments declined by €15/t to €575/t ex-works, while the drawing-quality wire rod index softened by €10/t, to €650/t delivered.
Italian producers dropped rebar prices to €580/t ex-works, including extras for sizes, with levels of €560-570/t ex-works available for larger orders, probably in attempts to spur buying interest ahead of the Easter holiday. Demand remains low as customers still doubt prices have reached the bottom, market participants said.
Indications for Italian drawing quality wire rod stood in a wide range of €640-670/t delivered locally and to nearby markets depending on tonnages, but producers were yet to start offering April material. In Spain offers were €10/t below these levels last week, but given high pressure from imports it was possible to obtain lower prices for sizable tonnages in Italy and Spain. Workable levels for high-carbon wire rod remained at €750-780/t delivered in Italy late last week.
Offers to nearby markets were scarce as some mills closed their March order books and were about to start their April campaign next week. But indications for rebar were pegged at €585-590/t ex-works, although given lower local prices discounts were deemed available. Despite a slow recovery seen in the construction sector across Europe, Italian mills were mainly focused on the central region while they faced high competition with Turkish suppliers in the southern countries.
Although inflation rates fell below 3pc, it was unclear if interest rates might decrease, but any cut would only be slight, a German market participant said. Construction activity is not expected to improve substantially, with fabricators maintaining cut and rebar prices in the range of €650-690/t delivered in Germany. Rebar prices from Germany mills were indicated at €640-650/t delivered for smaller tonnages and at least €630-640/t delivered lower for larger lots, with €620/t delivered available in some cases. Some German buyers were still receiving tonnages booked late last year for the first quarter as they had to postpone these deliveries after slower than expected construction demand.
In Poland rebar prices fell to €650/t delivered and below locally, with €630/t delivered available to nearby markets last week.
Offers of Bulgarian rebar lowered to 1,215-1,230 lev/t (€621-629/t) delivered last week under pressure from cheaper imports.
Some European buyers have resumed purchases of rebar and wire rod from overseas suppliers in recent weeks, suggesting prices may be close to reaching a floor. Sales were reported mainly from Turkey to Balkan markets at $580-595/t for small lots of rebar, with latest bookings heard to Serbia and Albania last week. “In Serbia no-one wants to buy a kilogram, as they are scared of further price drops,” a buyer said. Drawing quality wire rod was also heard booked from Turkey mainly to Spain at €590/t cfr or slightly below for late March-early April shipment in the past two weeks, with this quarter’s quota filled and it is estimated that Turkish allocation for the next quota period will be exhausted promptly in the first few days of next month.
Egyptian mills were offering rebar at $580-590/t fob and were said to be focusing on other markets, such as the Americas. There was talk that GCC rebar might have been imported to Europe recently, probably because of a prolonged downturn in Asia and other markets, but no details have emerged.
Argus Media
CBAM complications, safeguard hinder steel activity: Assofermet
The normative framework of the EU Carbon Border Adjustment Mechanism (CBAM) and safeguards on steel imports is hindering the daily activity of Italian and European steel companies, says Italian steel trade association Assofermet.
The challenges in filling CBAM reports, the economic repercussions expected from the mechanism starting in 2026, as well the safeguard measures in force from 2018 are a deep concern for Assofermet’s many members.
The European Commission (EC)’s Directorate General for Trade and the Directorate General for Taxation and Customs Union asked the association to highlight the critical issues of the mechanism to help with drafting the final version. “It has been assured that our perspective will be taken into account, especially for the future evolution of CBAM … Agreeing that CBAM will also generate increased costs for downstream end-users in the steel supply chain, it was pointed out to the Commission that if certain finished products … are not included in the mechanism, the European industry will lose competitiveness, given its global role,” Assofermet warns in a note sent to Kallanish.
The association notes an open-minded attitude from Italian authorities to listen to the problems of the entire steel supply chain stemming from regulations and willingness to continue dialogue on the regulatory framework. While the first quarterly report deadline for CBAM has passed, the safeguard on steel imports is currently set to expire at the end of June 2024. “There are no official updates yet on a possible extension after the first half of this year,” Assofermet concludes.
31 January was the deadline for importers to submit their first report detailing emissions as part of CBAM. The European Commission nevertheless announced this week that due to a technical incident, it is offering the possibility to request for a 30-day delay for submission (see Kallanish passim).
During the ongoing transitional phase of CBAM, European importers of steel need to file quarterly reports in the European Commission system, starting from those for the fourth quarter of 2023. During the transitional period, importers are required to report on the quantity of imported goods and resulting direct and indirect emissions. No payments will be due. The transitional phase is planned to conclude at the end of 2025.
Natalia Capra France
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
Italian September tube may hike on costlier HRC
Italian welded tube prices are seen increasing in September, in line with the expected increases in coil values. The welded tube market remains subdued, with demand weak and prices depressed in most European countries, sellers and buyers tell Kallanish.
Tube values continue to lag behind hot rolled coil tags due to weak downstream demand. Uncertainty is dominating the market, which is now quiet due to the August holiday break. Discounts remain at 37-39 points, with purchases implemented only back-to-back and prices unsustainable compared to processing costs.
Commodity grade 40x40x3 product remains at €800/tonne ex-works, which provides practically no margin. While some positive signals are coming from the automotive sector, many other industries are ordering low volumes and distributors are keeping stocks low. Tube sales in July and the first week of August are reported to be weak with no significant restocking occurring.
The Italian and European HRC market is however forecast to become livelier in September and prices to increase, pushed up by the exhaustion of EU import quotas. Third-quarter quotas from Vietnam, Indonesia and other Asian countries are already exhausted, while few tonnages remain from Korea. Buyers can import only from Turkey, whose suppliers are offering higher prices, as well as from India.
HRC buyers say Korean suppliers will give no allocations to Italy for Q4 and new import quotas will expire on 1 October, the same day as they are renewed. Amid the general downturn of the steel sector in Europe, this seems the only good news for September, and both coil and coil derivative prices are seen increasing, albeit gradually. The market remains fragile. Downstream demand and consumer confidence are seen remaining weak, with no surprises until the end of the year.
The target for re-rollers is to reach 35 points for tube discounts. Sources see September HRC prices at €700/t ($766) base ex-works.
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