As reported previously, at the beginning of the current week global steel giant ArcelorMittal announced it will temporarily reduce its production in Europe by around 3 million mt. According to market sources, this reduction does not seem sufficient to stabilize or push up domestic flat steel prices, unless several other producers follow suit.
European producers could try to halt the declining price trend and even announce price increases amid high import offers (Turkish HRC prices are at $490-500/mt FOB), but the domestic flat steel market seems too weak in terms of demand in order to absorb higher prices. Inventories are relatively high in the steel distribution chain, while steel-using sectors, especially the automotive sector, have witnessed a slowdown since the second half of 2018.
"Prospects for production activity in EU steel-using sectors in 2019 and 2020 are rather weak," according to EUROFER's latest economic and steel market outlook. As indicated by market sources, domestic producers' hot rolled coil (HRC) prices in northern Europe are currently at around €475/mt ($532/mt) ex-works, down €5/mt compared to one week ago. Meanwhile, HRC prices have decreased by €5/mt in the Italian market, to €450-460/mt ($504-515/mt) ex-works.
€1 = $1.12