Attempts by European manufacturers to raise prices may widen the gap between tariffs on hot-rolled coils in the EU and import prices, forcing buyers to increase their import purchases despite the duties, Kallanish reports, citing Italian roll buyers.
Recent adjustments to EU protective measures and anti-dumping duties are projected to reduce imports of flat rolled products to the EU by 5-6 million tons per year (see Kallanish passim). This includes hot and cold rolled rolls, as well as flat coated products.
“Despite the fact that their[mills’] opinion is well-founded, the price increase for HRC looks speculative. It is supported by protectionist measures, rather than real consumption and market demand, which remains noticeably weak,” the Italian service center comments.
ArcelorMittal is reportedly raising prices for HRC in Northern Europe to 700 euros per tonne (US$773), while in southern EU countries they amount to 680 euros per tonne. Many European steel producers strive for similar indicators, but service centers face significant difficulties in raising prices and report low profitability and no profitability at all.
“The current level of demand is significantly lower,” another service center said. “We are under pressure from the rising prices of HRC producers, while simultaneously facing lower prices for sheets and strips.” He notes that at a price of 700 euros per ton, EU producers are simply widening the gap with import prices. Prices from countries such as Indonesia or Malaysia range from 540-550 euros per ton compared to Europe. .
The market is currently assessing the level of duties that buyers will pay for materials imported outside the quotas after the quotas resume on April 1. There is an overload of galvanized steel products and, in particular, hot-dip galvanized products from Vietnam in the ports, as the quota allocated by Vietnam has been exceeded. In the previous quarter, buyers were subject to duties ranging from 8% to 10%.
“It is vital for us to achieve profitability of 50-60 euros per ton,” the source comments. If European prices reach 700 euros per ton, buyers will consider importing 550 euros per ton cfr economically advantageous. Even after taking into account the duties, import prices will still be lower than European ones.
“There is a need to increase prices throughout the value chain, however, we are not currently seeing any upward changes. There are no signs of improvement on the part of our customers. In the automotive and household appliance sectors, the figures are significantly lower,” he concludes.
