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Steel prices remained flat despite fuel prices weighing on production

by Ag Metal Miner

Hot Rolled Coil Steel Prices Western Europe has remained largely unchanged since early September. However, as various market participants told Metalminer, this is despite efforts by at least one steelmaker to boost them. According to our sources, several factors continue to restrain demand for flat rolled products. These include the slowing of public works programs across Europe. Another culprit is lower consumer purchases in the face of rapidly rising fuel prices and economic uncertainty. Recently, higher stock levels have joined that list.

A trader reported that recent transactions for the flat rolled product were at €740-750 ($740-750) per metric ton EXW for October rolling / November delivery. Deals for hot rolled coil occurred in September at around €750 ($750) for the same rolling and delivery times. It’s worth noting that this is against the official offer prices of €800 ($800).

In September, ArcelorMittal sought to raise its offer price for the flat rolled product to €850 ($850), the sources added. However, poor demand prompted the Luxembourg-based group to pull back €810 ($810) last week.

Imports from Southeast Asia weighed on the market, as HRC transactions from Vietnam settled at €680-685 ($680-685) per metric ton CIF Bilbao and Antwerp, January delivery.

Applications for HRC include construction and weld pipe production. It is also used as feed stock to produce cold rolled coil, which remains integral to the white goods and auto sectors. Typically, CRC carries an average premium of €100 ($100) per metric ton over HRC.

Steel prices and energy prices continue their dance

One trader told us he believes prices will continue to fall, reaching around €620 ($620) by the end of the year. Despite the fact that prices generally rise during this time, buyers try to hedge against the January mill price hike. “The key word here is ‘normal’,” the trader said, referring to Europe’s unique economic situation.

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In response to market conditions, producers across Europe have announced plans to curtail crude steel production on a temporary or indefinite basis. Demand for flats in Spain currently accounts for 40% of normal demand, which is around 8 million metric tons.

Fortunately, data from Trading Economics showed that energy prices in Europe have eased significantly, with benchmark Dutch TTF gas hitting €189.78 ($187.61) per kilowatt hour as of late on September 21. This is a decrease of about 14% from € 21 ($2210.540). On September 8.

The decline is largely due to actions by European governments to curb rising prices and avoid shortages. The European Commission also plans to raise €140 billion ($138 billion) from energy companies’ profits and mandatory cuts on energy consumption.

European gas stocks are more than 86% above their five-year average despite Gazprom indefinitely cutting flows through its Nord Stream pipeline, Trading Economics added. That line runs under the Baltic Sea from Vyborg in northwestern Russia to Lubmin in eastern Germany.

From the metal miner team

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