€500/mt likely to be the cut off point for HRC fall: sources

The European coil market has been slipping downwards, but delegates at the EUROMETAL World Steel Summit conference in Dusseldorf did not expect a prolonged fall, with many suggesting €500/mt ex-workks will be the cut off point for hot rolled coil.

While pressures are building in central and eastern Europe, traders noted the withdrawal of Russia from the import market and the potential for the declining coil prices to invigorate the EC’s investigation into HRC imports.

“I don’t see the market dropping considerable so it won’t go below €500/mt, maybe €510 but not much lower,” a mill source said. He said he was still “easily” able to achieve sales at around €530-540/mt in Germany, but accepted the market is on a downward track.

A trading source said he expects the major Europeans to return below €500/mt, but agreed that pressure from imports was slowing. He said the biggest cause for the European HRC market to fall was the availability of Russian HRC once the preliminary duties were not imposed. But he noted “the window for buying from Russia is now closing” as Russian mills have now largely withdrawn from the market.

He said many had bought in big quantities from Russia at €480-490/mt CIF Antwerp, but the lead times meant the trade flow was no longer viable.

In January, the EC enforced registration of Brazilian and Russian HRC but, as preliminary duties were not imposed, material could again be bought without threat of duties. As a result, there was a window of opportunity for people to buy.

But while preliminary measures were not imposed, buyers said they were concerned final duties could still be imposed and made retroactive. “The EC can announce registration again at any point,” a buy-side source said. The retroactive period can be applied for three months before the October 6 final decision which means many are nervous that HRC arriving in July will be susceptible to measures.

In his presentation, Alexander Julius of the German trading group Macrometal said: “It was the first case where the European Commission really considered the case of the end users, and the first case where they faced a major objection from end users.” But he said the EC had made €500/mt the effective cut off point, so if the market falls back below that level he said it was more likely that final duties would be imposed.

Peter Brennan, S&P Global Platts