European buyers have been holding back from making deals for hot-rolled coil because their credit lines have been full, due to record-high prices and doubts regarding the sustainability of the current price trend, sources told Fastmarkets on Friday March 25.Only a few deals for limited volumes of coil have been heard in the market. More buyers were reported to be looking for material from distributors’ stocks in order to get necessary volumes faster.
Record-high prices for flat steel in the EU resulted in full credit lines at buyers, limiting their purchasing ability. As a result, buyers preferred not to book big volumes from domestic mills and have also been avoiding imported material, despite its competitive prices.
Overseas suppliers offering HRC to Europe at about €100-200 ($110-220) per tonne below domestic prices failed to create significant buyer interest. A majority of import offers have been heard for material from India or East Asia, and lead times were therefore long. Combined with still-high import prices and uncertainty over the price uptrend, this kept European buyers away from making deals.
European mills have either withdrawn their offers from the market or have been offering second- or third-quarter-rolling HRC.
Some sources said that the producers had been planning another offer price rise this week but changed their minds. This made some buyers believe that the current price level could not be maintained in the long run.
The majority of European distributors have sufficient stocks of flat steel and they have been making deals only for smaller tonnages of specific coil grades to fill gaps in specifications.
In the meantime, high electricity and gas costs, and shortages of raw materials and semi-finished steel products due to the Russia-Ukraine war, have made producers adjust their output.
Sources said that mills in Eastern Europe were the most exposed to the effects of the war because they previously relied on raw materials supplies from Ukraine and Russia. More producers have been looking for import slab, particularly from China, India and Brazil, to replace missing raw material, sources said.
Fastmarkets calculated its daily steel HRC index, domestic, exw Northern Europe, at €1,406.25 ($1,545.54) per tonne on March 25, up by just €1.70 per tonne from €1,404.55 per tonne on March 24.
The index was up by €2.68 per tonne week on week and by €436.25 per tonne month on month.
The calculation was based on deals heard at €1,400 per tonne ex-works and achievable prices estimated by market sources at €1,400-1,430 per tonne ex-works.
Fastmarkets calculated its daily steel HRC index, domestic, exw Italy, at €1,390.00 per tonne on March 25, down by just €2.39 per tonne from €1,392.39 per tonne on March 24.
The index was up by €30.00 per tonne week on week and by €490.00 per tonne month on month.
The calculation was based on achievable prices reported at €1,380-1,400 per tonne ex-works.
Turkey-origin HRC was sold to Southern Europe at $1,240-1,300 per tonne fob this week, sources said. This price would net back to about $1,310-1,370 per tonne cfr, but no more details had been reported by the time of publication.
Published by: Maria Tanatar