In June, as spot steel prices and demand continued to decline, the difference between the pricing of European hot-rolled coil steel and raw materials dropped significantly, beginning to put the profitability of steelmakers to the test. This gap narrowed by 19% from May.
According to a July 3 research by S&P Global Commodity Insights, HRC prices dropped more quickly in June, marking their second straight monthly loss. S&P Global predicts that the spot difference between Northwest Europe HRC steel and raw materials decreased from Eur490/mt in May to an average of Eur396/mt ($428/mt) in June.
The euro declined to an average of $1.08 in June, leading to generally higher import costs for raw materials denominated in dollars.
According to an analysis of World Steel Association data, scheduled and unplanned shutdowns at blast furnaces in Western Europe resulted in a 10.9% decrease in pig iron production for the EU steel sector in May when compared to the same month last year. Blast furnace units at ArcelorMittal plants in Gijon, Spain, and Dunkirk, France, were suddenly taken down for inspections till the end of June.
Even with a decline in downstream demand and restocking, the region’s lower iron and steel output contributed to a restriction in the availability of spot steel in different grades.
A basket of iron ores with high-grade fines, lump, and pellets that are frequently consumed by local blast furnaces in Germany, France, and other regional EU markets was among the iron ores that S&P Global tracked using significant steel feedstock cost references.