Italian coil prices continue to tick up compared with early February, although domestic activity remains relatively subdued. Both small and large buyers have resumed sourcing from the import market, market participants tell Kallanish.
Despite the uncertainty surrounding CBAM costs, larger buyers continue to purchase directly from Asia. One source says they are working closely with suppliers on CBAM certification and are confident that several foreign mills will qualify under actual emissions values, as they intend to preserve their European market share. Smaller buyers, meanwhile, report purchasing only on a delivered-duty-paid (ddp) basis to limit risk.
A trader notes that some traders are prepared to assume the CBAM risk by offering ddp terms, while others remain reluctant due to the potentially prohibitive impact of default CBAM values. Several larger buyers say they are accepting a degree of risk due to their substantial HRC needs. They rely on long-standing relationships with Asian and Middle Eastern suppliers. They expect CBAM charges for their purchases to remain within €50-60/t ($58.94-70.73/t).
Ddp transactions have been concluded around €600-610/t approximately ten days ago. However, offers from Turkey and North Africa have since increased to €620-640/t ddp. A Middle Eastern cargo is rumoured to have been sold at slightly below €530/t cif. One service centre says current domestic levels of €650-660/t delivered are justified, given hot rolled sheet prices of around €750/t delivered. Downstream activity remains somewhat subdued.
Domestic HRC is currently at around €650/t base delivered. Market sources indicate that ArcelorMittal has exhausted allocations for Southern Europe. The producer is now targeting €750/t base delivered for HRC in Southern Europe, while asking prices in Northern Europe remain at around €720/t base delivered.
Availability of cold rolled coil remains limited, and supply of hot-dipped galvanized material is also constrained. Contract prices for CRC and HDG are expected to reach €800/t base delivered, compared with current levels of around €780/t delivered, Kallanish understands.
Italian producers are targeting €810-820/t for HDG, while several other European mills report little or no CRC availability. HDG offers into Italy from other European suppliers are heard at €800-820/t delivered, depending on producer and origin. Limited volumes of imported CRC have meanwhile been concluded at around €740/t base cfr.
Although import activity has recently resumed on both cif and ddp terms, market participants expect bookings to slow again towards May ahead of the new safeguard regime scheduled for July, amid uncertainty over quota allocation and the cost of both CBAM and safeguard.
