EU HRC: Ilva force majeure has limited impact

Steelmaker ArcelorMittal Italia's force majeure had little impact on European hot-rolled coil pricing today, highlighting the malaise engulfing the marketplace.

The Argus daily Italian index actually shed €2/t to reach €454.25/t ex-works, while the headline northwest Europe marker was down by €0.50/t at €474.75/t ex-works.

ArcelorMittal had to rapidly hot idle blast furnace two and four at its Taranto works yesterday, as unions went on strike after high winds toppled a crane and threw a worker into the sea.

The strike was cancelled yesterday evening, and workers returned today. Blast furnace four was started this morning and the number of ladles blocked with cast iron was "gradually decreasing", the company said.

Nevertheless, one large buyer said it was already witnessing delays to deliveries from Ilva. Structural coil grades from a German mill were also delayed.

One Italian steelmaker has withdrawn from the market in the past day or two, having sold as low as €440/t ex-works for remaining July production. Another mill has sold at similar levels and perhaps slightly higher, but some said it was having issues sourcing CIS substrate. A Serbian producer was said to have sold as low as €465/t effective base, putting it almost in line with domestic Italian mills.

One mill is signalling price increases for September, as are some others. Most buyers said they believe there will be a big push from steelmakers to try and get price rises in the third quarter as the margin squeeze intensifies — the $120-125/dry mt iron ore seen of late will only be consumed in September. But with sentiment so low, most buyers said they think it will be difficult for mills to increase selling prices.

The continuing automotive issues are still weighing on other sectors throughout Europe, with mills and service centres trying to offset the decline in auto demand with shipments into other general industry segments. This was hitting margins among service centres, but also feeding into decent stock levels for end-users, which were happy to hold off from purchasing in anticipation of price reductions. Industrial activity has disappointed of late, with summer seeming to start earlier than usual, despite eurozone industrial production nudging up by 0.9pc in May.

One service centre said it had sufficient stock for the next five months, around 20pc more than it would normally carry.

Imports remained largely shut out by low domestic prices, although there was a plethora of third-country material on offer. An Egyptian offer was heard at €493/t cif Bilbao for small tonnages of around 2,000t, with the trader margin included. Indian material was offered to the same port at around €475/t cif, both of which were uninteresting for buyers. With domestic lead times short and pricing at parity to, or below, imports, appetite for overseas coil was limited.

There was talk of one Japanese mill offering to Iberia, perhaps as low as €460/t cif, although this could not be confirmed. Another Japanese mill recently sold to Turkey at around $490-515/t cfr, a very competitive level. European offers to Turkey had been heard at around $500-510/t cfr, but these seem to have dissipated in the past few days.

A Turkish mill was still offering around €455/t cif to Italy, but was not receiving many orders. Another Turkish seller said workable prices were as low as €440/t cif, which was below cost and so not interesting. Only one Turkish mill was really active in the European market.