ArcelorMittal on forecasts for demand for flat steel in Europe

Demand for flat steel in Europe is expected to grow by 2-4% this year, ArcelorMittal said.

Indeed, an improvement in apparent steel demand in January allowed European steel producers to deliver higher prices on the spot market.

It is noteworthy that in January, prices for hot-rolled coil in Northern Europe grew steadily. The Fastmarkets daily domestic hot rolled coil index excluding Northern Europe averaged €731.73 ($787.81) per tonne for the month, the highest since May 2023.

But in early February the trend seems to change. Sources told Fastmarkets that buyers had been trying to reduce inventories in recent weeks and were not interested in purchasing new tonnes of hot rolled steel.

Due to sluggish trading, HRC prices in Northern Europe have even dropped slightly. Fastmarkets calculated the daily domestic hot rolled steel index ex-Northern Europe at €755.38/t on Wednesday 7 February, down €4.20/t from €759.58/t on 6 February.

Rental prices on the spot market have been decreasing since February 2. According to Fastmarkets sources, a full-fledged downward trend is unlikely, since factories have good order books and import options are limited.

ArcelorMittal added that real demand is expected to decline slightly this year, mainly in the construction sector. But the company remains positive about the medium- and long-term prospects for steel demand despite the economic headwinds.

ArcelorMittal Europe key indicators in the fourth quarter of 2023
ArcelorMittal's steel production in the European segment reached 6.63 million tonnes in the fourth quarter of 2023, down 11.3% compared to the previous quarter.

“[The decline in production] was impacted by the upgrade of Blast Furnace A in Ghent, Belgium, and scheduled maintenance of Blast Furnace No. 2 in Bremen, Germany,” the company said. They added that both blast furnaces (BFs) resumed operations in early December 2023.

ArcelorMittal noted that some production cuts had also been initiated at BF1 in Fos-sur-Mer, France, and the company confirmed that BF1 remains idle and did not provide any timeline for its restart.

ArcelorMittal's steel shipments to Europe remained stable in the fourth quarter of 2023, reaching 6.51 million tonnes, up from 6.54 million tonnes in the previous quarter.

“[This was] due to continued weak demand driven by inventory drawdowns and construction-related demand,” ArcelorMittal said.

Sales in the fourth quarter decreased 10.2% from the previous quarter to $7.99 billion due to a 4.4% decline in average steel selling prices.

According to ArcelorMittal Europe, the average realized steel price in the fourth quarter of 2023 was $975 per tonne, compared to $1,020 per tonne in the third quarter.

Operating income at the company's European unit reached $11 million in the fourth quarter, up from $160 million in the previous quarter. According to the company, the main reason for this was the negative price effect.

The same factor weighed on ArcelorMittal Europe's earnings before interest, depreciation and amortization (Ebitda), which fell 28.9% to $336 million in the fourth quarter from $473 million in the previous three-month period.

Sustainability
ArcelorMittal continues its efforts to produce low-carbon steel in Europe. The company expects its 1.1 million tonne per annum electric arc furnace (EAF) in Gijon, Spain, to become operational in the first half of 2026, according to the report. Thus, the company will be able to switch to low-carbon steel production.