The German steel market has been notable this week, with HRC prices decreasing from EUR 575 to EUR 565. However, CRC prices remained stable at EUR 725. These price fluctuations in Germany are seen as a reflection of lack of demand and oversupply across the market. German steelmakers report continued sluggish sales despite keeping prices low. Local steel service centers and distributors in particular are reluctant to replenish their inventories due to low demand and further price decreases are expected. However, no official decision has yet been taken to reduce production as this would lead to a loss of carbon allowances.
A similar situation is unfolding in Southern Europe...
In Spain, the steel market decreased from EUR 600 to EUR 570 with a significant decrease of EUR 30 in HRC prices. CRC prices, on the other hand, decreased by EUR 40 to EUR 680 this week from around EUR 720 in the previous week. These sharp decreases in steel prices in Spain are seen as a reflection of the weak demand across Europe and the fact that it is one of the most competitive countries. Prices are being further pressured by fierce competition between exporters and importers and low energy costs. Similarly, lower production costs compared to other European countries allow Spanish steel producers to remain competitive in the global market, but this advantage is offset by weak domestic demand.
In Italy, the steel market also witnessed a EUR 30 decrease in HRC prices to EUR 535. The 2-3 mm HRC market also saw a decrease of EUR 20, with prices trading at EUR 540. CRC prices, on the other hand, were traded at EUR 680, a decrease of EUR 30. In Italy, galvanized steel coil prices were similarly decreased by EUR 31 to EUR 789. In the country, these decreases continue due to lack of demand and oversupply in the market. Market participants in Italy expect prices to stabilize by October as HRC prices are close to bottoming out for producers.
Italian sources suggest that the current low prices are putting cost pressure on producers and some production lines may be shut down to avoid further losses. However, there has been no official confirmation of this situation. Still, players in the Italian market believe that the current prices are not sustainable for producers despite import pressure.
The decreases in HRC and CRC prices across Europe are exacerbated by the general recession and oversupply in the steel sector. Weak demand is particularly felt in the construction and automotive sectors, with producers struggling to realize sales despite low prices. In the north and south of Europe, prices are under pressure and a quick recovery is not foreseen. In this environment, steel producers may have to consider options to cut production to manage oversupply and stabilize prices.
In the short term, a recovery in the steel market will only be possible if demand picks up. It is hoped that moves such as the European Central Bank's interest rate cut will support economic recovery, which in turn will have a positive impact on steel demand.
Comments
No comment yet.