Outlook unclear at key steel coil event

Spanish Market: Metals
24/10/24

Sentiment was mixed at a flat-steel focused event in Hannover, Germany, this week.

Mills' offers coalesced around €600/t ex-works north Europe for hot-rolled coil, as they tried to reverse recent months' deepening losses. One lower-cost producer told Argus it had been losing €40-50/t on commodity-grade sales. Prices are unsustainably low and have to increase, executives said.

Mills were working to underpin the market, as difficult talks with the automotive supply chain over 2025 accords continued. While automakers were pushing for large reductions, aiming to take their contract prices closer to spot, mill and service centre sources said the material that automakers take from domestic producers — especially when considering the service they receive — is far removed from the commodity grades that compete with imports. Automakers often postpone or cancel cargoes in a difficult market — one factor contributing to the limp demand currently confronting steelmakers. Some service centres noted that they do not have the same luxury.

Mills pointed to retroactive duties on imports from Egypt, India, Japan and Vietnam as one supportive factor for prices. Definitive duties will probably be backdated to January, Argus understands. A general reduction in imports will also provide a more captive market for domestic mills, and there was widespread expectation that more measures will be implemented by the European Commission.

With mills having secured their free carbon emissions allowances by continuing to produce through a period of weak demand, they will probably cut output early in 2025. One large mill will idle a blast furnace in France from April, but this is for maintenance. No other cuts were reported at the event, although German sources note that one German mill will close a hot-rolling line after refurbishing another.

Demand remained the key headwind for producers and service centres alike. Service centres reported losing hot-rolled sheet business close to €620/t ex-works in Germany, and there was increasing speculation over the health of some automotive-facing businesses, especially those that have seen volumes dwindle quicker than the market average.

Weak demand has enabled buyers with index-linked contracts to secure increased tonnages at more favourable rates for 2025 — either through higher discounts and rebates or lower freight rates. Some mill-owned distributors are at risk of closure, with some in Germany working just one shift a day, sources at the event said.

By Colin Richardson

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20/11/24

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13/11/24

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13/11/24

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