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European stainless market reaches deadlock

The wind has changed in the European stainless flat steel market as prices are declining due to extremely sluggish demand, Kallanish hears from market sources.

Uncertainty is dominating buyers’ mood. Service centres and end-users across Europe have stopped purchasing due to the unsustainable price levels for hot and particularly cold rolled coil. The imminent coil price decline is seen by multiple players as a needed downward adjustment.

European mills are said to have orders until June but no new orders for July delivery. They are in the process of reviewing their formula of surcharge plus base price to calculate coil values. Because of skyrocketing monthly alloy surcharges in recent months, the traditional formula pushed CRC up to over €5,000/tonne ($5,260) for May and June delivery.

Meanwhile, Asian CRC quotes are extremely competitive at €4,400-4,500/t cfr Europe duty paid. The attractive import offers and high-priced domestic material have caused service centres and re-rollers to stop buying domestically in May.

Domestic stainless CRC for May and June delivery has been sold across Europe at €4,800-5,300/t delivered, while HRC is sold at €4,300-4,400/t delivered on average, sources suggest. European mills’ CRC offers for July delivery are expected to decrease and align with import values. Sources forecast new European prices at €4,500-4,600/t delivered.

Meanwhile, prices for coil derivatives such as sheet and tube are also decreasing, by some €200-250/t on average compared to the end of April. Sales volumes are said to be low and demand weak, with customers adopting a wait-and-see attitude.

The service centres who spoke to Kallanish however do not see a price collapse coming and are not too concerned by the standoff. They notice that their customers are reluctant to buy because they believe prices will fall, but end-use demand is still evident.

Natalia Capra France