SMM Daily Comment On Domestic HRC Market (Sep 19)

Italy's crude steel production fell 3.5% year on year to 793,000 tonnes in August 2026, according to Italian steel industry association Federacciai. Despite the August decline, crude steel production during January-August increased 2.4% year on year to 13.993 million tonnes. Output trends diverged significantly between long and flat products. Italian long steel production fell 10.2% year on year to 395,000 tonnes in August, although January-August output remained 5.2% higher at around 8.4 million tonnes. Flat steel production, meanwhile, increased 30.3% year on year to 374,000 tonnes in August. The sharp increase partly reflected a low comparison base after flat-product production fell 31% in August 2025. During January-August 2026, flat steel output remained 2.4% lower year on year at around 5.7 million tonnes. The figures indicate that Italy's overall steel production weakened in August, with the decline particularly pronounced in long products despite cumulative production remaining above year-earlier levels.

Germany produced 2.594 million tonnes of crude steel in August 2026, up 1.7% year on year but down around 3% from July, according to German steel federation WV Stahl. Production trends differed significantly by steelmaking route. Electric-arc-furnace output increased 13% year on year to 720,000 tonnes, while oxygen-route steel production declined 2% to 1.874 million tonnes. Pig iron production fell 5.5% to 1.649 million tonnes, while hot-rolled steel output increased 4.1% to 2.356 million tonnes. During January-August, German crude steel production increased 6.3% year on year to 23.902 million tonnes. Oxygen-route production rose 7.2% to 16.464 million tonnes, while EAF output increased 4.3% to 7.438 million tonnes. Despite the year-on-year increase, WV Stahl described the recovery as subdued. Based on production during the first eight months, Germany's annualised crude-steel output was around 35.9 million tonnes.

Spanish steelmakers have begun temporarily halting production during periods of peak electricity prices as sharply higher energy costs weigh on the sector, according to Spanish steel industry association UNESID. UNESID estimates that Spain's steel industry will face around $749 million (€658 million) in additional energy costs between March and December 2026. Around $514 million (€452 million) of the total is expected during September-December, compared with €206 million accumulated through August. Electricity accounts for an estimated $459 million (€403 million) of the total additional cost, while gas accounts for around $290 million (€255 million). The association said adjustment services are adding around $23/MWh (€20/MWh) to electricity costs, prompting steelmakers to stop production during the most expensive hours. UNESID warned that such curtailments could increase if current price levels persist. Electricity prices are forecast at around $163/MWh (€143/MWh) in the fourth quarter, while natural gas prices are expected at around $86/MWh (€76/MWh). UNESID has called for immediate government measures, including higher compensation for indirect carbon costs and continuation of reduced electricity-grid charges for energy-intensive industries. The association said around 70% of Spanish steel production is exported, with approximately two-thirds of exports destined for other EU markets.