Assofermet: downstream slowdown, pricing pressure Italian service centres

Reduced sales volumes and high costs continue to plague the Italian service centre and distribution sector, which is wedged between steelmakers and end users, Italian trade association Assofermet says in a market note seen by Kallanish.

In response to the upstream price increases for coils, service centres are now being compelled to raise prices of coil derivatives and pass the hiked costs on downstream. Firms are aiming to enhance financial positions and secure margins for the conclusion of the year.

The prevailing sentiment for December is one of a wait-and-see attitude. “November saw the consolidation of rising [hot rolled coil] quotes from EU steel mills despite much weakened demand from the downstream market, which still does not seem to be waking up. It is precisely this decoupling between the upstream production sector and downstream consumption which both confuses and worries all operators,” the note states.

Steelmakers are under pressure to enhance their financial performance, and the production cuts announced for 2025 are a response to persistently pressured margins. Assofermet is observing a stagnation in demand from various end users, which is preventing any new growth in prices and volumes.

EU producers, however, are rigidly insisting on increasing prices, driven by a reduction in available import quotas alongside anti-dumping duties, which make purchasing from the import market uncompetitive.

In November, distributors experienced a notable decline in volumes, accompanied by reductions in margins and turnover, primarily driven by persistent price weakness.

Assofermet recently launched a new calculation platform enabling coil buyers to assess potential anti-dumping and anti-subsidy duties as part of European Commission investigations. The initiative aims to support members’ understanding of the EU regulations regarding anti-dumping investigations. The calculator assists in evaluating the potential timing and imposition of duties.

Natalia Capra France

kallanish.com

EU HRC market remains largely stable as buyers avoid bookings

Domestic prices for European hot-rolled coil remained largely stable on Sept. 20, as buying activity remained limited in the market due to low end-user demand.

“Buyers, such as service centers and distributors, are not in a great position to offload material,” an Italy-based mill source said. “Therefore, they are not in a great rush to buy. End-user demand is just not enough.”

“Pricing is not the problem,” a distributor source said. “Problem is low/no demand.”

Platts assessed Northwest European HRC stable on the day at Eur555/mt ex-works Ruhr on Sept. 20. Tradable values were reported at Eur550/mt EXW Ruhr from a buy-side source.

Platts assessed domestic HRC prices in Southern Europe also stable on the day at Eur555/mt EXW Italy, with tradable values reported at Eur540-580/mt EXW Italy.

Sources said that production overcapacity in Asia has made it difficult for European suppliers to compete with them. However, interest in imports still remained weak due to concerns around safeguard duties and anti-dumping investigations.

“Production overcapacity in Asia is making things difficult for EU suppliers,” a service center source said.

Platts assessed imported HRC in Northwest Europe at Eur540/mt CIF Antwerp, down Eur5 on the day.

Meanwhile, Platts assessed imported HRC in Southern Europe at Eur540/mt CIF Italy, up Eur5 on the day.

Devbrat Saha

spglobal.com

 

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.

Natalia Capra France

kallanish.com