EUROPE SECTIONS: Southern EU prices likely to rise again on coil market strength

Domestic prices for hollow steel sections in Southern Europe are likely to rise over the next month, with producers facing a shortage of hot-rolled coil (HRC) in the region, sources have told Metal Bulletin.

HRC prices have enjoyed a strong start to 2018 in Southern Europe thanks to a lack of available imported material at workable prices and problems with output at Italian steelmaker Ilva.

“[Steelmakers] ArcelorMittal and Tata want an extra €20 [$25] per tonne for hollow sections, but some Italian suppliers are trying to get a bit more,” one stockholder said.

“We are under pressure from the [situation in] HRC, not only in terms of price but availability too,” one Southern European tubemaker said. “There is a fear that if I don’t buy today, tomorrow it will be more expensive.”

His hollow sections prices will increase progressively over the coming weeks, with the rise “necessary to achieve the correct margins,” he added.

“HRC prices are getting on a [rolling upward trend] in Italy, and it won’t stop. The increase in coil costs will hit the market in the next few weeks,” another stockholder said.

“It’s steady, but maybe in February there will be a bit of a decrease,” a third stockholder said. “The pipemakers really don’t have enough coils, so they will have to import them.”

Metal Bulletin’s domestic price assessment for S235-grade square hollow steel sections made in Southern Europe stayed at €610-645 ($748-791) per tonne delivered on Wednesday.

Northern Europe ‘disappointing’
While market participants expected higher prices in Southern Europe, the outlook for the Northern European domestic hollow section markets was far less clear.

Metal Bulletin’s price assessment for S235-grade square hollow steel sections made in Northern Europe stayed at €640-660 per tonne delivered on Wednesday, unchanged since November 22.

“In square and rectangular tubes, there has not been much movement in northwestern Europe,” the first stockholder said.

“If another €30 per tonne is added to the price in Italy, the Northern European mills will have €45 per tonne to make up because [the price in] the northwestern region is not moving,” he said.

European economies are improving and manufacturing output has been at a record high, according to the purchasing manager’s index (PMI) for the eurozone manufacturing sector. But these healthy signs are not trickling down into the Northern European hollow sections market, sources said.

“The reason [for the lack of change in prices] is probably demand. Demand here is not very strong,” another stockholder said.

“The expectation was a bit higher,” the second stockholder said. “Economies are growing, steel production and consumption are growing, but where is [the demand]?”

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