Slight Improvement in Market Sentiment in the Steel Sector

The latest survey conducted by the European distributors’ association EUROMETAL in January showed a slight improvement in market sentiment, although expectations regarding future activity, inventory levels and prices remained largely unchanged.

Although the three main customer segments indicated stable activity, the overall improvement in sentiment was influenced by the outlook of the steel industry experts.

However, the flat steel service centre segment expects a slight decline in both activity and inventory levels over the next three months.

Geographically, respondents in France, the Nordic countries and the Visegrád group countries reported an improvement in current activity, with the Nordic countries and the Visegrád group expecting a slight decline in stock levels over the next three months.

The UK and Ireland, on the other hand, reported a slight deterioration in activity, while Turkey expects both stock levels and activity to increase in the short term. Overall, prices are expected to remain stable.

The European Commission’s Industrial Competitiveness Strategy

In response to global challenges and the need to strengthen the competitiveness of European industry, the European Commission presented the ‘Competitiveness Compass’ initiative. This action plan aims to support key sectors such as steel, lower energy costs and introduce a European preference in public procurement.

The Commission points out that over the past two decades Europe has failed to keep pace with the leading global economies due to a persistent productivity growth gap.

The ‘Clean Industrial Deal’ aims to make the EU a competitive platform for manufacturing while promoting industrial decarbonisation. In addition, the ‘Affordable Energy Action Plan’ aims to reduce the cost of energy for companies, while the ‘Industrial Decarbonisation Accelerator Act’ will offer faster authorisation processes for sectors in transition.

A key part of the strategy concerns the creation of trade partnerships to ensure a stable supply of essential raw materials. Furthermore, the revision of public procurement rules could lead to the introduction of a European preference for critical sectors and technologies.

Another key point will be the modernisation of the single market, removing intra-EU barriers and ensuring a uniform regulatory framework for businesses.

Recovery of Crude Steel Production in Europe

In 2024, the European Union recorded the first annual increase in crude steel production since 2021, up 2.6 per cent year-on-year to 129.49 million tonnes.

However, the production level remains below that of 2020, highlighting the financial difficulties that continue to affect several steel producers. Germany, Europe’s largest producer, saw production rebound 5.2% year-on-year to 37.2 million tonnes. However, the volume remains below pre-pandemic levels, despite exceeding 2020.

Italy, Europe’s second largest producer, on the other hand, recorded a 5% drop in production to 20.01 million tonnes, marking the lowest level since 2009. This result was influenced by production difficulties at the Taranto plant, one of the largest in Europe.

France and Spain both showed signs of recovery: French production increased by 7.6% to 10.76 million tonnes, while Spain increased by 3.3% to 11.82 million tonnes, the highest level since 2019, excluding the post-Covid peak of 2021.

The increase in production in some countries was supported by the return to operation of key plants, such as the Ijmuiden blast furnace in the Netherlands, which contributed to a 36% increase in Dutch production. Belgium and Poland also recorded strong increases, by 21% and 10% respectively.

In contrast, production plummeted in some Central and Eastern European countries, mainly due to the difficulties of Liberty Steel. The Czech Republic saw a drop of 25%, with the Ostrava plant virtually shut down and put up for sale. In Romania, production dropped by 16% and in Hungary it even halved to just 240,000 tonnes by 2023.

Outlook and Strategies for the European Steel Sector

The European steel industry continues to face high costs and increasing global competition.

To meet these challenges, the association of European steel producers, Eurofer, is intensifying pressure on the European Commission for more restrictive policies on steel imports from non-EU countries.

In addition, Eurofer is calling for a specific industrial plan for the sector, capable of ensuring greater competitiveness and supporting the ecological transition.

The new European Commission, which will take office in December 2024, is already working on these issues. The key issue will be balancing the needs of the industry with the goals of sustainability and decarbonisation. 2025 could be a crucial year for the future of European steel, with policy decisions that could redefine the industrial landscape of the continent in the coming years.

Upward Trend in Hot Rolled Coil (HRC) Prices in Europe

On the price front, the European hot rolled steel (HRC) market has seen price increases for four consecutive sessions, supported by limited imports and renewed buyer interest.

According to industry sources, material availability is tight, which is contributing to a gradual upward push in quotations. HRC Hot Rolled Coils – Northern Europe quotations stood at €572 per tonne, up 0.27% from the previous day.

Low Availability and Offers for the Second Quarter

Steel plants in Northern Europe are almost fully booked for the first quarter of the year, leaving only limited volumes available for delivery in March. Offers for deliveries in April and May are in the range of EUR 620 to 630 per tonne ex-works.

Some market participants speculate that steel mills might try to obtain even higher prices, especially in the absence of foreign supply alternatives. However, no significant transactions were reported in the northern European market on Wednesday.

The market level currently acceptable for trading is between €580 and €600 per tonne ex-works.

A German-based distributor pointed out that, until two or three weeks ago, reaching such price levels seemed unlikely. However, the upward price trend is gradually materialising, supported by a slight recovery in trading activity.

The Italian Market: Rising Prices but Sluggish Commercial Activity

At the same time, the price of hot-rolled steel also increased in Italy. Prices in the area stood at €602 per tonne, in line with the previous week. On a monthly basis, the increase amounted to +1.35%.

Despite rising prices, the Italian market appears less dynamic than that of Northern Europe. According to local sources, trading activity remains subdued, with few transactions recorded recently.

One Italian buyer reported that inventories are currently high and that many operators prefer to adopt a wait-and-see attitude, waiting to understand how the market will develop after the completion of the steel safeguard review.

He also pointed out that real steel consumption in Italy is likely to remain low in the coming months. However, apparent consumption could increase if operators decide to carry out restocking operations in response to possible new trade protection measures.

One integrated steel mill submitted offers for material with delivery at the end of March at €610-620 per tonne delivered, which translates into a net ex-works price of €600-610 per tonne. In parallel, another source reported that an Italian producer started to offer HRC at €620 per tonne ex-works, signalling an upward trend in producer demand.

According to a second buyer, demand for imported steel is currently very weak, with almost no interest in new bookings from abroad. This scenario is favouring a progressive shift of purchases to the domestic market, where the prices of the latest transactions are between €590 and €600 per tonne ex-works.

The price level considered acceptable for the Italian domestic market is between €580 and €590 per tonne ex-works, confirming a certain stability in the values charged.