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UK Steel Manufacturers are Cutting Hot-Rolled, and Cold Rolled Coil Prices

UK Steel Manufacturers are Cutting Hot-Rolled, and Cold Rolled Coil Prices

UK Steel Manufacturers are Cutting Hot-Rolled, and Cold Rolled Coil Prices

  • 25-Aug-2022 3:44 PM
  • Journalist: Bob Duffler

In Northern Europe, Hot-Rolled and Cold Rolled Coil products have witnessed a downside price correction this week as mills cut costs to spur buyers' interest. Manufacturers offer discounts to fill order book gaps, utilize excess feedstock and finished steel inventory, contribute to fixed cost recovery, and generate cash flow. However, most European customers postpone their purchase activity because they do not need the material immediately. According to our sources, distributors and end-users have ample stock availability, which is unlikely to be reduced sufficiently by early/mid-September to spur a substantial increase in buying activity.

Market players noted that several mills are selling at or below their marginal cost of production, despite soaring energy costs. European flat products manufacturers produce Steel sheets, Hot-Rolled Coil, Cold Rolled Coil, closing iron and steelmaking units, rolling lines, and implementing short-time work to rebalance the market. Some buyers believe that European hot rolled coil prices have reached a low point and are inquiring about deliveries in late 2022 or early 2023, hoping to lock in supply at the current low levels.

Despite lower prices, no recovery in the demand outlook has occurred. Distributors have sufficient coil product inventories and have refrained from restocking due to a negative price trend and limited end-consumer demand. Because service centers maintain high stock levels, they are comfortable with deferring new deals. Some mills cut prices even though lower prices will not support demand because they need to fill book minimum volumes for the fourth quarter to run the furnaces. Furthermore, steelmakers were said to deliver more material to affiliated service centers to maintain production rates. As a result, those minimum volumes have been replaced by local material, and those service centers are less interested in the imported coil.

Buyers have high stocks in a spot market, and there is little hope for demand and price recovery in the current economic situation. Earlier this summer, European steelmakers reduced output, but the cuts were insufficient to balance low demand and supply. Some market participants believe that mills will have to cut production even further soon, but they must wait until September to assess the market situation. As per ChemAnalyst, "Hot-Rolled and Cold Rolled Coil prices are likely to decline further. Distributors have ample stocks but will return to the market to book whatever volumes they need. "

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