Domestic coil prices rapidly rose in March 2022 due to panic buying triggered by Russia's attack on Ukraine on February 24. The market originally anticipated that the geopolitical tension would cut availability of steel and might result in shortage.

Against this expectation, steel demand suffered while supply remained on normal levels, despite a disruption of Black Sea supply and effects from sanctions. As a result, domestic coil prices in Europe had started to decline, with the negative trend lingering until December.

Coil producers across Europe reduced production rates in the second half of 2022, with some idling blast furnaces in an attempt to balance lower demand and supply and, consequently, prevent the decline of flat steel prices.

As operations at blast furnaces declined, iron ore markets suffered, especially the demand for pellets, while sinter and lump were incentivized in some cases due to lower comparative costs.

By December, European distributors have depleted the massive stocks accumulated in H1 2022. Restocking activities, combined with the effects from production cuts, rising import prices and high energy costs drove prices up.

Some of these idled blast furnaces have come back to life since the start of 2023, with European distributors restocking since December, and as European steelmakers respond to some improvement in demand and prices.

After finishing restocking in January, buyers have expressed concerns that higher prices might not be sustainable. This was due to stable end-user demand while availability of hot-rolled coil increased as a number of blast furnaces resumed operation.

Steelmakers, however, insist that they have good order books and demand remains solid to allow further price rise. In addition, import material availability had been limited, with HRC from Asia having long lead times and relatively high prices and exports from Turkey disrupted by the February earthquakes.

S&P Global Commodity Insights takes a look at the furnaces returned into operation in 2023, upcoming stoppages and anticipated changes in the European steel coil market. Northwest Europe

Northwest Europe

Germany

ArcelorMittal Bremen did not idle one of its two blast furnaces despite the original plans announced in September 2022. The steelmaker, however, had kept production at reduced rates and increased it when demand started to recover.

"Production levels are back to normal," an ArcelorMittal Germany spokesperson said.

Meanwhile, a direct-reduced iron plant at ArcelorMittal Hamburg, Germany, remained idled "due to overall economic situation", the spokesperson said. ArcelorMittal plans to resume production at the facility this year.

Another German flat steel producer, Szlagitter, postponed the restart of its blast furnace C in summer last year. The equipment remained idled in February.

Finland

SSAB resumed operations of the blast furnace at its Raahe steel plant in January after maintenance.

Netherlands

Tata Steel in the Netherlands did not idle equipment last year, but the company reduced production rates without stoppage. One of the plant's BFs will be closed for scheduled maintenance in Q2. Although the steelmaker accumulated some slab stocks ahead of the stoppage, production is likely to be reduced, according to market sources.

France

ArcelorMittal Dunkirk is currently operating two furnaces, while BF No. 2 "was permanently stopped in December as it is end-of-life," ArcelorMittal's spokesperson said. BF No. 3 has been idle since mid-September 2022.

ArcelorMittal Fos-sur-Mer, on the other hand, is preparing to restart a 2 million mt/year BF in Aprilthat, which was closed in November 2022. Market sources have expressed concerns that increased output from Fos-sur-Mer might have a negative impact on the South European market adding volumes and, therefore, potentially affecting the price recovery.

South Europe

Italy

Domestic availability of the coil in Italy remained reduced as an integrated producer Acciaierie d'Italia (ADI) had limited production, electric-arc furnace operating mill Arvedi has been focusing on downstream coil trading, and re-rollers have limited volumes to offer.

In January, ADI unveiled plans for 2023: to increase crude steel production of 4 million mt in 2023 from below 3 million mt in 2022, according to market participants' estimates; to restart blast furnace No. 2; and to start the relining of blast furnace No. 5 in H2. The plans, however, have yet to result in higher production, according to market sources.

Arvedi had been operating on a limited number of days each month starting from Q3 2022, but the production recovered in 2023. Use of EAF allowed the steelmaker to better adjust to shifts in market demand and they increased production rates as soon as market started to recover.

Spain

ArcelorMittal Gijon restarted BF A at the start of 2023 after it was idled on Sept. 29, 2022.

Central Europe

Coil supply in Central Europe has been particularly impacted by both planned and unexpected stoppages at local mills and missing import volumes from Russian and Ukraine.

Slovakia

US Steel Kosice restarted two BFs in January and it has been operating all three of its furnaces since. The steelmaker has higher production costs compared to its peers and its production is unlikely to trigger price drop, according to the estimations of market sources.

Romania

Liberty Galati will resume pig iron and steel making operations in full when it restarts its only blast furnace in mid-March. The equipment was idled in June 2022.

Czech Republic

BF No. 2 located at Liberty Ostrava remains idle. The company declined to disclose any information about its possible restart. Market sources, however, said that the blast furnace is expected to resume operation after the company's production resumes in Romania.

Poland

In January, ArcelorMittal Dabrowa Gornicza resumed production at blast furnace No. 3 that has not been operating since October 2022. The steelmaker currently is preparing to shut its BF No. 2 this quarter for an extended overhaul.

Hungary

Dunaferr, that went under administration in December, resumed production at blast furnace No. 2 in mid-February. UK's Liberty Steel reportedly secured a deal with the Hungarian state, allowing it to draw a credit line in state-owned EXIM Hungary to manage Dunaferr. Liberty began to pay for raw materials and transportation fees and has already supplied 40,000 mt of coal to the mill.

Serbia

HBIS Serbia continued to operate one furnace after its blast furnace No. 1, which has a capacity of 900,000 mt/year, was shut in late November. The steelmaker, however, expects to see a production rise soon.