Italian coil prices are flat compared to the beginning of May. The increases attempted by European steelmakers on hot rolled coil are yet to translate into higher deal prices. The market is stagnating again, with demand low and appetite for material non-existent, Kallanish hears.

Activity has become particularly quiet after a rather significant increase in demand and consumption in April. Last month, several sources were under the impression that consumption had finally rebounded throughout the value chain, but this turned out to be just a technical rebound after the weak purchasing of the first quarter.

Service centres’ clients are once again in a wait-and-see mood, with slow activity downstream persisting. Given the weak order intake, service centres are refusing to purchase HRC in Europe. Another phase of destocking throughout the value chain seems to have started. According to multiple executives, if the low consumption continues into June, EU steelmakers will have to reduce output.

Producers of HRC, hot-dipped galvanised and cold rolled coil intend to hold firm with their high asking prices despite the slow activity. According to two production sources, lowering values today will not spur sales. May sales have been mostly back-to-back.

Service centres are also shunning the import market. Asia-origin material is quoted at €600-620/tonne ($649-671) cfr Italy for end-August boarding but some buyers believe the level of €580/t cfr can be achieved. Turkish material is quoted at €605-610/t cfr duty paid but product quality remains an issue, in the eyes of European buyers. The latest few import contracts were concluded at €590-600/t cfr for Asian material.

Downstream, sheet prices continue to be extremely low, meaning persistently squeezed margins. Since the beginning of the year, several service centres say they have not made any profit and sometimes sold at below cost due to the current low prices. “The entire value chain would need at least €40/t more to turn a profit, both upstream and downstream,” a service centres comments.

Several sources agree that, at present, activity is so subdued that there is no accurate price indication, as sales are so few and far between. They indicate an average level for domestic HRC at €620/t base ex-works.