EU steel safeguards are unlikely to be prolonged beyond the summer of 2024, with import volumes likely to increase as a result, German steelmaker Salzgitter said today in its latest results filing.
The European Commission extended the measures for one year from June 2023.
Salzgitter said price softening in recent months was driven by China's ailing market, which caused increased import pressure into the EU from other Asian countries. Import volumes totalled more than 1mn t in May, the highest level since October 2021.
The exhausted other countries' quotas for hot-rolled coil (HRC) could offset this import pressure somewhat, as Asian countries under the residual quota cannot sell more tonnes into the EU without the risk of buyers incurring safeguard duties.
Salzgitter also said trading firms are opting to keep inventories as low as possible because of the higher costs of financing and warehousing.
Demand from some end-consumers, including the construction sector, has weakened over the first half of its financial year, Salzgitter said. High inflation also affected demand from other sectors, including white goods and other consumer-related industries.
Automotive was a bright spot, with easing supply chain issues and order backlogs keeping automotive call-offs stable. Automotive demand will remain "sound" over the rest of this year, the group said, adding that capacity utilisation in the strip business will be almost fully covered, although selling prices will remain under pressure. Argus' benchmark northwest EU HRC index has fallen consistently to €624/t on 10 August, from €850.75/t on 4 April.
Austrian steelmaker Voestalpine recently noted "significantly" improved demand from the automotive sector, driven by catch-up effects after the Covid-19-induced supply chain issues. It also highlighted low demand from the consumer and white goods industries. Without central banks reversing course on interest rate increases, demand from these sectors probably will remain low throughout this year, Voestalpine said.