Italian re-rollers plan production cuts, coils trend higher
Multiple Italian re-rollers and pipemakers are set to execute extended production halts throughout December. Two companies tell Kallanish of their decision to suspend operations for four weeks in order to align demand with supply. Current prices and margins are meanwhile considered unsustainable.
“The purchase cost of hot rolled coil has diverged from the selling prices of tubes. The repurchase of coil is not contributing positively to our operations, necessitating a reduction in production levels,” one tubemaker comments.
The implementation by the EU of robust protectionist measures has resulted in companies that previously sourced the majority of their HRC volumes from outside the EU facing a reduction in procurement options. This has also meant an increase in HRC prices. The conditions exist for European HRC to exceed €650/tonne ($685.29) base in the medium term, the source adds.
Downstream, re-rollers and service centres are experiencing notably low margins and financial losses attributed to the elevated costs of production and HRC. Re-rollers are anticipated to raise their prices in January as they adjust to the new market conditions, following extended production cuts and reduced availability.
“Should consumption fail to recover in 2025, numerous facilities in Europe may face closure,” another tubemaker says and adds that a discount of 48 points is not sustainable. This puts commodity tube prices at approximately €700/t ex-works.
Italian coil prices are slightly higher than they were at the start of the month. Conversely, downstream, prices for derivatives have remained stable. Cutting production significantly is also a way for re-rollers to reduce production costs.
European steel producers are currently discussing potential price increases for HRC in January. One major steel producer has informed buyers that, in January, it will request an increase of €20/t. In Italy, HRC is being contracted at an average of €555-560/t base ex-works, or €570/t delivered, stable on last week.
A producer plans to significantly reduce output this year to align demand and supply, and will temporarily halt operations at its plant for three weeks between December and January. The company will not take bookings for January and will exclusively accept orders for February due to the prolonged closure. Italian producers have largely completed their December order books.
The availability of material in Italy is expected to be limited due to the impending stoppages. Acciaierie d’Italia is currently operating at a diminished capacity. Italian HRC producers are aiming to increase their prices to €600/t delivered. However, customers remain sceptical about the feasibility of this target in the current market conditions.
One leading European producer is currently pricing HRC at €600-610/t base ex-works or delivered in various European markets. Current sales activity at these price points is virtually non-existent, but the absence of import alternatives leads sellers to believe this level will soon be reached (see Kallanish 28 November).
Natalia Capra France
