Some EU coil mills buck trend, ramp up output

Certain European coil producers are already ramping up production, despite announcing cuts earlier this year.

A European integrated mill, which decided in spring this year to cut production to 40pc, has since late summer returned to full capacity utilisation, it told Argus on the sidelines of the World Steel Dynamics European Steel Conference in Milan, Italy. The ramp-up has come earlier than it should have, as EU prices have continued to decline in September-October and no rebound is expected until the year end, a source from the mill said. The mill expects an uptick in April.

But by producing at a higher rate, mills are able to achieve economies of scale and reduce costs per tonne, and despite the depressed hot-rolled coil market, some can still make a few euros of margin. Estimates of the losses incurred by some northern European mills have been pinned as high as €100/t. One southern European mill is reportedly losing €2mn/d, sources said.

Market participants expect the effects of production cuts to be felt in the first quarter of 2020. But the reductions may have come too late, chief executive of Italian re-roller Marcegaglia Antonio Marcegaglia said in his keynote presentation today in Milan. Marcegaglia estimates that 6mn t/yr of production has been cut across EU mills, which he expects to have an effect on the market soon.