Despite the widespread opinion that flat steel prices are now close to hitting bottom levels in the European market, in the past week further decreases have been recorded in flat steel prices both in Italy and in northern Europe.
In the Italian market, base prices of hot rolled coil (HRC) are currently in the range of €380-400/mt ($422-444/mt) ex-works, recording a €15/mt decrease compared to seven days ago. The range of cold rolled coil (CRC) and hot dip galvanized (HDG) prices is also quite wide, being at €480-495/mt ($533-549/mt) ex-works. In northern Europe, HRC prices at the same time have decreased from €420-430/mt to €415-420/mt ($461-466/mt), both ex-works.
Tommaso Sandrini, president of Assofermet Acciai, the association of Italian steel distributors, interviewed by SteelOrbis, said he largely shares the opinion that flat steel prices are close to reaching the bottom in the European market. "The difference between production prices and sales prices has actually become unsustainable," he explained. Nevertheless, a possible rebound would be due more to technical reasons than to a real recovery in demand. Sandrini also expressed fears that the ongoing shutdown of plants by producers not only in the EU but also in other regions of the world (including China) could lead to corrections in raw material prices. In this scenario, steel prices would be supported by production cuts on the one hand, while on the other hand they would be negatively influenced by a fall in raw material prices. Therefore, Mr. Sandrini did not exclude that next year there will also be strong price volatility, with significant price increases followed by equally strong declines. Speaking of the present, he confirmed that there has been a slight slowdown in destocking activities by European service centers recently and the start of "a phase of still-very-selective purchases".
According to a local trader, in the coming weeks domestic coil prices could still suffer decreases totaling €20/mt, "but not more than that".
On the import side, according to sources, offers for HRC are in the range of €370-390/mt ($411-433/mt) CFR Italy and there is a significant number of ongoing negotiations that could lead to actual transactions in the coming weeks.
€1 = $1.11