Some hot rolled coil contracts in the EU are reported to have concluded at higher prices following increases recently implemented by ArcelorMittal, Kallanish hears.
HRC contracts have been heard concluding at €590/tonne ($648.40) base ex-works, up from last week’s average level in Europe of €530-540/t base ex-works, suggesting recent increases implemented by ArcelorMittal have been successful.
The majority of EU producers are currently offering a November lead time and are aligning their quotes with ArcelorMittal’s new HRC quotes, which are priced at €590/t base ex-works.
Nevertheless, volumes are exceedingly low and transactions are still scarce, with numerous buyers and sellers confirming the market requires additional time to absorb the increases.
The market downstream remains sluggish, and some buyers are firmly opposed to the increases.
European producers are reported to have received a high volume of orders at the previous prices in the final days of September and the first days of October, as customers foresaw the increase. Some buyers have adopted a wait-and-see approach as a result of the hikes.
A service centre in Italy reports increased calls from customers and orders in a sudden surge of apparent demand. Customers would prefer to buy coil derivatives at previous prices.
This, however, is not real consumption. Rather, it indicates that buyers are becoming increasingly concerned about the possibility of material scarcity and the potential for price increases.
Another source in Italy indicates the automotive sector, in particular, is experiencing a far greater degree of slowdown than anticipated, which is causing a challenging situation downstream.
The manufacturing sector in Europe is currently experiencing a crisis, and downstream demand for flat steel is expected to remain lacklustre.
However, the EU’s recent turn towards protectionism has virtually eliminated the possibility of purchasing coils through imports. Some Asian suppliers, including India, have also raised their prices to €590/t cfr, while Turkey is also reported to be at €590/t, including duty.
In Italy, re-rollers have continued to purchase from the import market at competitive prices, while service centres are refraining from doing so.
As of 1 October, the majority of Italian HRC import buyers had successfully cleared through customs the stocks they had in consignment at ports, coinciding with the renewal of EU import quotas.
Stocks of this material, ordered in March and April, will deplete rapidly, according to a source, and pursuing import options in future will remain challenging.
Coil prices are expected to rise if European steelmakers reduce production by the end of the year or in the first quarter of 2025.
The source anticipates HRC will increase, if cuts are implemented, to above the €600/t base ex-works level, with the possibility of reaching €650/t base ex-works due to a shortage of available material.
At present, HRC prices as well as coil derivative values are deemed unsustainable.
Following ArcelorMittal’s increases, Italian re-rollers and service centres said coil derivative prices are poised for a price increase.
Natalia Capra France