Upward price momentum slows in southern Europe

Italian hot rolled coil domestic basis prices increased in mid/late September before stabilising in the early part of October, as procurement activity softened. Supply is tight, due to reduced production at several steelmakers.

Imports are available but, except for a number of large buyers, purchasers are cautious about procuring material from Turkey, due to the revised quarterly safeguard quotas and the threat of retrospective trade action.

In Spain, mills are yet to achieve their minimum target basis price for hot rolled coil, of €500 per tonne. Distributors report that day-to-day business activity is at an average level. On the downstream market, over the past month, prices for hot rolled sheets have caught up with the recent increases recorded for the parent coil product.

Cautious buying despite auto recovery

Italian buyers of cold rolled and hot dipped galvanised coil anticipate that supply will remain restricted in the near term, with local mills well booked and import volumes insufficient to fill the gap. A revival is noted in the automotive sector and the packaging industry continues to perform well.

Nonetheless, many steel buyers are cautious about the medium-term market trend. Consequently, they are purchasing only for their immediate requirements. Procurement executives report that they are managing their stock levels to mitigate risk.

In Spain, the mills are looking for additional prices increases for value-added steel products, due to a shortage of material but many buyers are adopting ‘wait and see’ positions, carefully managing their inventories. Hot dipped galvanised coil producers are, reportedly, targeting a minimum basis value of €600 per tonne.

Spanish distributors indicate that requirements from automotive companies are utilising a large amount of the mills’ available capacity but contend that supply and demand will be more balanced by the year-end. Meanwhile, domestic steel buyers are waiting to observe the short-term price trend before making substantial purchases.