STEEL NEWS

EU steelmakers' profit may fall even more noticeably in Q2

According to Platts, in the second quarter of 2020, profits for hot rolled steel in Europe could decline even more due to low demand, as the coronavirus pandemic disrupts world trade.

The second-quarter hot-rolled steel and raw material prices for northwestern Europe may fall to € 231 ($ 249) per ton, amid relatively higher raw material costs, from about € 253 per ton in the first three months of the year, basis of calculations using futures prices on April 3 for steel, iron ore and coking coal.

According to Platts, in March the price range of hot-rolled raw materials averaged € 2664 ($ 289) per ton.

In 2019, the price range of hot-rolled raw materials averaged around € 228 per ton in the fourth quarter and about € 236 per ton in the third quarter - levels that are considered lower than cash costs.

Break-even operating costs — industry sources are expected to be closer to a difference of € 250 per tonne between steel and raw materials — partly dependent on logistics costs and raw material configurations.

In the past few weeks, blast furnaces in Germany, France, Spain, Italy and other countries have been shut off to more accurately reflect demand for steel, as automakers and other end users in Europe have been inactive.

Hot roll futures prices on Friday showed that hot roll in Northern Europe was available for hedging at lower levels than the March average, with expectations for further price easing at the end of this quarter. This happened after in February and March the European benchmarks of hot-rolled coils at the plant were restored.

Steel prices stayed amid declining production, and a sharper decline in iron ore and scrap prices could keep steel margins closer to March levels.

However, a decline in pig iron production in Europe may continue to put pressure on producers as the EU struggles with the import of flat products from Turkey, the CIS and Asia.