European flat product prices reach new peaks

20th April 2021

European hot rolled coil and sheet values reached new heights, during early April. Further increases are already being pushed through and quotations from regional suppliers now have extremely short validity. Mills spend a brief time in the market then leave, only to return with new, higher, price proposals. Buyers have little choice but to accept the offers, as the need to secure future inventory is more important than trying to negotiate today’s price. Few market participants see any imminent downward correction.

Steel producers are concentrating on supply to key industries and clients. Mills allocate capacity in line with customers’ previous order levels but at reduced volumes. Production maintenance work, scheduled over the coming months, will continue to curtail output, which has still not returned to pre-Covid-19 levels.

A number of service centres chose to delay their purchases, during the first quarter, and are now struggling to obtain material.

Distributors’ stock levels are becoming very low and reserves have been utilised. Delivery lead times, for hot rolled material, are extending beyond the third quarter and the next round of negotiations will be for supply in October and November.

Cold rolled and coated coils are following the trend set by hot rolled. The financial difficulties surrounding Liberty Steel and ArcelorMittal Italia, now renamed Acciaierie d’Italia, have added to market uncertainties. MEPS notes a panic for supplies of galvanised steel in southern Europe. Quotations from import sources are scarce, with prices and delivery lead times from East Asia similar to those offered by EU mills.

Despite no apparent end to current upward price movements, buyers question the sustainability of actual levels. Service centres report that automotive demand has fallen by 30 percent, in parts of Europe. Light construction projects are being postponed because of high costs. The agricultural sector is delaying purchases. The white goods industry remains unaffected, so far, due to significant value added to the final product.

The momentum in the hot rolled plate market is accelerating. Re-rollers have increased their selling values to incorporate surging slab costs, which have risen with extra demand for other flat products. Integrated plate mills, in turn, are now lifting their price offers.

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