After the first 10 months of 2020, the upward price momentum in the Southern Europe steel sector starts to slow down.

1. Italian hot-rolled coil domestic basis prices fluctuateIn mid/late September, Italian hot-rolled coil domestic basis prices increased before stabilizing in the early part of October. Due to reduced production at several steelmakers, the supply becomes tight.Imports are available but purchasers are cautious about procuring material from Turkey. It is due to the revised quarterly safeguard quotas and the threat of retrospective trade action.
2. Basis price for Spanish hot-rolled coil is far to the minimum targetIn Spain, mills are yet to achieve their minimum target basis price for hot-rolled coil, of €500 per tonne. Distributors report that day-to-day business activity is at an average level. On the downstream market, over the past month, prices for hot rolled sheets have caught up with the recent increases recorded for the parent coil product.
3. Cautious buying despite auto recovery in southern Europe steel sectorMany buyers in Italian anticipate that supply will remain restricted in the near term. It is due to the fact that local mills are well booked and import volumes are insufficient to fill the gap. A revival is noted in the automotive sector and the packaging industry continues to perform well.Nonetheless, many steel buyers are also cautious about the medium-term market trend. Therefore, they only purchase for their immediate requirements and try managing their stock levels to mitigate risk.
4. Hopes in Spanish steel prices risingIn Spain, the mills are looking for additional price increases for value-added steel products due to a shortage of material. However, many buyers are adopting ‘wait and see’ positions, and carefully managing their inventories. Hot dipped galvanized coil producers are, reportedly, targeting a minimum basis value of €600 per tonne.Spanish distributors indicate that requirements from automotive companies are utilizing a large amount of the mills’ available capacity but contend that supply and demand will be more balanced by the year-end. Meanwhile, domestic steel buyers are waiting to observe the short-term price trend before making substantial purchases.

Source: MEPS International Ltd