The lull on the northwest European coil market is persisting and calls are growing for mills to reduced output. This could however coincide with a restocking wave that some players see coming, which could lead to a sudden price rebound.

“The most important industries for steel are lagging behind expectations, which were already adjusted downward. As long as the status quo lasts, there won’t be any relief for the mills,” a buyer from the Netherlands says.

Another Dutch source concurs, stating that “current market prices are at the pain threshold for producers.” He adds: “it is likely that mills will soon begin to lean towards production cuts again, in an attempt to stabilise prices.”

A buyer at a German distribution group agrees. “It is not an option for the mills to bring down prices much further in the hope of attaining order volumes”, as they are “approaching their absolute pain threshold”, he notes.

Sources refrain from speculating what the lower price limit is, but in some cases transactions of hot rolled coil have been reported at €650/tonne ($703), which could be an indication for the floor. Prices currently range from that point to €690/t for HRC. Cold rolled coil is fetching the customary premium of around €80/t, and galv €100/t, sources say.

A Benelux service centre manager believes that “more and more buyers see the bottom of prices being reached”, and also that many distributors will have to replenish their inventories sometime soon. “In the first quarter, most distributors have bought little, possibly too little,” he tells Kallanish. If a restocking wave comes suddenly, while mills have reduced production, “this would mean longer lead times, bottlenecks”, and possibly a sudden leap of prices.