Drop in prices for hot-rolled coils continued in July

World prices for hot-rolled coil (HRC) continued to decline in most major markets during July. In Europe, the situation was mostly stable, with slight fluctuations, and in the US and China there was a decline in prices by 4-7%. In particular, Chinese prices reached a 4-year low, and American – the lowest level since September 2023.

In Western Europe, quotations of g/k roll for the period June 28 – July 26, 2024 remained at the level of €620-630/t Ex-Works. There was no hesitation. In Italy, during the same period, the upper price limit also remained unchanged at €630/t Ex-Works. At the same time, the lower limit dropped to €610/t compared to €620/t on June 28. According to forecasts, the price may drop to €590-620/t Ex-Works in early August.

The weakness of the European hot-rolled sheet market is a consequence of low demand for products. At a time when Western European producers kept the prices of their products at previous levels, there were price fluctuations in the Italian market, in particular due to the lack of demand from car manufacturers. A similar situation is observed in other sectors-consumers of rolled steel. Most of the final consumers are in no hurry to replenish stocks before the August shutdowns of metallurgical plants for technical maintenance.

Some steel companies reported a decrease in orders of about 30% compared to last year. At the same time, the average order fulfillment period is currently about 1 month.

In the II quarter, sales of g/k sheet on the European market fell sharply, and expectations for the III quarter do not foresee an improvement in the situation. According to forecasts, July-September will be relatively calm against the background of a decrease in global steel consumption and long-term plant shutdowns.

Additional pressure on the market is exerted by import suppliers from Asia, who continue to reduce product prices to attract buyers. Currently, their offers are around €570-580/t CFR, while the Turkish mills are offering €570/t CFR.

Recently, the European Commission announced the probable initiation of an anti-dumping investigation against some exporting countries that supply the European Union with hot-rolled coil under the quota of «other countries».

The quota for «other countries» has filled up quite quickly in recent quarters since its renewal, and this pressure has increased significantly since the increase in Chinese exports from August 2023. Some key exporting countries from this quota during the first half of the current year sharply increased steel imports from China, in particular Vietnam – to more than 4.2 million tons compared to 6 million tons in 2023.

The EU government tried to deal with the likely entry of Chinese products into the local market by introducing a 15% limit for countries falling under the «other countries» quota in April, but with the start of the new quota period on July 1, they quickly exceeded the limits again.

In the long term, the restriction of imports of cheap products into the EU may support local steel producers, but quick changes are not expected.

On the North American market, prices for HRC decreased by 7.1% during the last month – to $650/t Ex-Works. This is the 3rd monthly decline in a row. Local manufacturers complain of weak demand due to a seasonal decline in steel consumption. At the same time, the product offer remains at a high level. Market participants expect that the price situation may improve in September.

At the end of July, the American steel company Nucor announced an increase in prices for steel coils by $25/t, citing high production costs and increased order flow. This may indicate a likely bottom in the market.

«While the surge in dumped and subsidized flat imports in the first half of 2024 impacted our pricing, we are now struggling with higher raw material prices and seeing an increase in orders,» Nucor said in a letter to clients.

Cleveland-Cliffs also set a new monthly price for August above the market range. The steelmaker announced that the target level is currently $670/t. Market participants are not sure that consumers will agree to higher prices in the current situation.

In China, prices for H/C coil for the period June 28-July 26, 2024 decreased by 4.7% to $505-510/t FOB, the lowest level since October 2020. Product quotations are stagnating against the backdrop of low consumption and increased inventories, as well as the absence of macro-financial support for the steel market from the government. End buyers choose a wait-and-see attitude against the background of constant price reductions, and service centers and distributors do not want to accumulate stocks and try to reduce them. Export demand has also deteriorated but still provides some support to the Chinese market.