An fall in European producers' cold-rolled stainless steel prices and input costs in the third quarter will make output more competitive against imports from Asia, including China and Indonesia, according to Alessandro Bettuzzi, sales director at Italian distributor Oiki Acciai Spa and co-ordinator of Italian steel and scrap association Assofermet's stainless steel division.
On the sidelines of last week's Made in Steel event in Milan, Bettuzzi said high service centre stocks and weak demand in key sectors like automotive and household appliances are likely to mean a weak third quarter in Europe, particularly in Italy, with its many distribution centres.
"I'm not positive for the next month," Bettuzzi told Argus. "This is because fundamentals are so weak, and prices of scrap nickel are falling, which will produce lower prices than today's level."
A further fall in energy costs will also bring down prices, keeping imports at bay, he added.
Following January-February's mostly stable prices in Europe, Bettuzzi said the cold-rolled flat product market fell by €100/t from mid-March. The downtrend will probably continue until July, he said, given the pattern of weakening demand over the past eight months.
The Argus assessment for stainless steel 304 cold-rolled 2mm sheet delivered northwest Europe had risen to €2,655/t at the end of February from €2,500/t at the end of December, but had fallen to €2,525/t by the beginning of May. Traders surveyed by Argus see further declines, as mills focus on capacity utilisation and filling order books.
"The auto and appliances industries at this moment are going through a major lull," Bettuzzi said. "These sectors are very important to absorb stainless steel."
Bettuzzi reiterated Asoffermet's view that a recovery can only happen if the EU starts thinking about safeguarding downstream end-products, instead of focusing on protecting upstream steelmakers.
"If final consumption disappears, everything upstream will disappear," he said. "Asoffermet is really pushing for this. The EU is focusing too much on the producer."
Energy prices remain a problem for European producers, and Bettuzzi said investment in renewables is the long-term solution.
"For Italy, it is all out how we negotiate as we are obliged to buy energy from other countries, which can cause fluctuations."
Bettuzzi cautioned against allowing Asian semi-finished products, such as slab, to enter Europe exempt from duty, and suggested applying the carbon border adjustment mechanism (CBAM) or a similar duty.
"If we apply duties only on coils and sheets, but do not impose duties on semi-finished products, they will come in at 25pc less from Asia compared to Europe," he said. Bettuzzi highlighted flanges, heavily imported by Italy, which have been arriving duty-free.
