European long steel producers are under severe financial pressure that could compel them to potentially close or divest certain facilities if the ongoing market downturn and lack of state support continues, several regional mill sources tell Kallanish. Tight margins and high costs continue to blight business in both southern and northern Europe.

“We are implementing a 25% reduction in production across Europe, focusing on western, eastern, and southern regions where feasible,” a prominent European steelmaker source notes. "We often operate during nighttime hours when energy costs are lower; however, our total production expenses remain elevated relative to the present market prices for longs in Europe."

Energy costs remain high, alongside persistently elevated scrap prices. "The current selling prices are unsustainable but difficult to increase,” the source continues. “Sales of wire rod and rebar are experiencing a downturn across Europe, with both products currently ranking as the poorest performers. In Germany, which was once a driving force in the European economy, sales are continuing to decline. In terms of prices and sales volumes, it is now among the worst-performing nations.”

The source observes that the European distribution sector is also under significant pressure and forecasts that certain companies may be forced to close next year.

A southern European mill source acknowledges current pricing levels are unsustainable, with producers implementing measures such as temporary layoffs, night shifts to reduce energy expenses, and production stoppages.

Halting production is regarded as a strategy to reduce expenses and minimise scrap purchases. One flats mill in Italy is suspending production this week, while another longs manufacturer is temporarily closing one of its facilities for the entire month of November.

“The entirety of Europe is confronting this crisis; no nation is immune from the decline in consumption,” the southern European mill source notes. Costs have increased to the point where the value chain's exceptional 2022 earnings are now being used to offset the dire financial circumstances of 2023 and 2024.

The current indicators do not suggest a recovery, and multiple sources anticipate that 2025 will mirror this year, albeit with some adjustments. However, demand may rebound in the latter half of next year.

Another prominent longs producer with facilities in several Europe countries has expressed significant concerns regarding this crisis. The market may contract structurally in the long term.

Italian longs distributors and service centres are seen facing closure. Sources indicate that ArcelorMittal's distribution branch in Bologna, Italy, is set to permanently close on 31 December. Customers have been notified of the decision and reassured about the status of pending deliveries. ArcelorMittal declined to comment (see Kallanish 7 November).

A large number of steel service centres across Europe are facing financial difficulties and could potentially cease operations for good, according to sources.