Coil imports lose competitiveness in Europe

After a prolonged period of steady inflow, coil offers from overseas to Europe have gone up and lost their attractiveness for EU buyers.

“Just today I received a call with offers from Asia because some ship is not full yet. It seems they [Asian suppliers] are not selling their stuff that well any longer,” a buyer from a German fabricator tells Kallanish. For his purposes, he needs plain S235 hot rolled coil, while the domestic integrated mills prefer to do higher grades. “So, we are pretty dependent on Asian offers as well, and like to buy through both channels, but currently there is no advantage in price,” he says.

This was still different a few weeks ago but, now, import offers have adjusted and come close to the €600/tonne ($623) that marks the low end of the HRC offer range from domestic EU mills. “I’m getting it from Italian or German mills for €660 delivered,” an Austrian manager says. “That means $590 cfr can’t lure me if I have to wait three months, so we are not buying from import now.” Offers of cold rolled coil from abroad meanwhile stand at €700-720/t, according to a Swiss trader.

A Dutch manager emphasises the massive surge in imports this year. These came from traditional export countries Brazil, Vietnam, Korea, Taiwan and India, but also “Japan proved to be a huge outlier”, he observes. “In 2020, it exported about 83,000 tonnes of coils to Europe. In the first eight months of 2022 alone, the export volume is a whopping 730,000t plus.” Excess production is typical in economies with a dependence on the automotive industry, in which activity has slowed, he adds.

Because prices moved irrationally for most of this year, the long lead times could be seen as an argument in favour of imports, given the safety some months down the line of a certain tonnage at a certain price. This is no longer the case, and the latest appreciation in import prices should foreshadow a reversal in the European pricing downtrend.

Christian Koehl Germany