End users forecast relative stability, with some mild, €10-20/tonne ($11-21) downward adjustment possible for Italian coil prices in the fourth quarter.

“We do not see any signs of recovery from here until December and, according to our projections, final demand will not jump in Q1 2024 either. Consumption for our products is some 25-30% below pre-pandemic levels of 2019 and we have a similar situation in all European countries,” one major end user tells Kallanish. He adds that despite the low consumption, he does not see prices of coil in Europe collapsing but rather adjusting downwards due to high production costs.

Among the sectors particularly hit by the economic crisis are construction and white goods, but now also automotive since a few weeks. While the automotive sector ordered good coil volumes in the first half of the year, demand seems to be faltering since July and there is pessimism about its future capacity to support coil prices and sales.

The European appliances industry has been hit hard by the crisis, with its performance in the second half proving to be particularly weak. Activity remains at low levels and sources in the industry are lamenting squeezed margins due to high costs of steel and other components.

One executive in the sector foresees future coil capacity cuts in Europe. However, he notes there is uncertainty among European producers when it comes to production cuts and how to handle a protracted period of low consumption.

Meanwhile, the tug-of-war between Italian service centres and producers continues against the backdrop of weak orders and a production slowdown. Mills would like to increase prices on high production costs but service centres do not see any space for hikes in such a market. The market is uneventful and although hot rolled coil values have fallen compared to September, no one is willing to buy. A large service centre says they are able to resist through October without buying any product.

At present, Italian HRC is quoted at €600-630/tonne ($630-661) base ex-works, with the high point of the range increasingly hard for mills to achieve. Cold rolled and hot-dip galvanized coil levels are at €720-740/t and €750/t base ex-works respectively, sources suggest.