Hollow sections price cuts next month ‘unwise’, sources say

Producers of European domestic hollow sections would be ill-advised to reduce their prices during the quiet holiday period in August, sources told Steel First on Wednesday July 27.

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“It would be unwise to [cut prices] now,” and to do so “would be devastating in September”, when many market participants return to trading after the holiday period, a Northern European distributor said.

“I do not expect any movement until the end of August,” a Southern European producing source said, agreeing that to reduce prices now would make little sense as “customers are at a standstill” and waiting to see what happens in the market.

“A lack of orders is putting pressure on the prices from mills,” the distributor said, adding that he has seen some of the more expensive mills in Southern Europe reduce their selling prices for the material over the past month.

This price dynamic was observed by Steel First, which reported similar prices for domestic hollow sections prices in both Northern and Southern Europe two weeks ago, after assessing a €15-20 ($16-22) premium for Southern European material over Northern European material a little more than one month ago.

But market sources reported little activity in the market this week, which has kept prices stable.

Therefore, Steel First’s price assessment for commodity-grade square hollow sections on July 27 was €510-530 ($561-583) per tonne delivered in Northern Europe and €510-525 ($561-577) per tonne delivered in Southern Europe, unchanged from last week.

Prices for European domestic hot rolled coil (HRC), which is the base material used to create hollow sections, remained stable this week, with the healthy order books of producers protecting prices from the effects of weak demand and subdued activity.

And the producing source said that he had heard rumours that HRC producers may try to capitalise on the reopening of markets at the end of August by increasing their selling prices, perhaps after ArcelorMittal’s expected mid-quarter pricing announcement concerning flat steel.

Steel First’s weekly assessments of ex-works prices for hollow sections on July 27 remained at €495-515 ($544-566) per tonne in Northern Europe and at €495-510 ($544-561) per tonne in Southern Europe, with average freight costs of €15 ($16) per tonne.