The EU coils market was reported as “static” April 5, with market demand reduced in the wake of the recent price rally, though new uncertainties relating to sanctions and energy costs were heard on the day.
Reports about demand were mixed between stockists and end-users. One mill source considered demand as higher than the week ended April 1, trading smaller volumes of material for project-focused end-users.
“Demand is still reduced, but the needs of the market are strong in terms of end-users,” said the source. “Stockists are reluctant to buy at these prices, but buyers that need material for projects are still accepting offers.”
A distributor source reported the same, describing buyers as “holding their breath” due to perceived market risk and volatility.
New uncertainties were heard on the day from one distributor source, reporting that market participants were concerned about the effects of potential new sanctions against Russia.
While semi-finished products are not currently affected by sanctions, the source speculated that renewed issues with domestic production could hit the EU coils market if Russian semi-finished supply chains – upon which a reported 3 million mt of EU production depends – were further disrupted.
The source also confirmed ongoing issues with energy costs, reporting that EAF mills would have to further reduce production if prices continued to escalate. Mills were already reported as moving to short-work — preferring to sell from stock due to the unsustainable costs of fulfilling orders from fresh production.
As such, energy surcharges were at the forefront of source discussions on the day, with one service-center source expecting mills to impose surcharges on yearly contracts, as they “do not have any other chance” to recoup growing costs.
A mill source denied any internal discussions or plans relating to surcharges.
HRC in Northern Europe was assessed up Eur2.5 on the day at Eur1,392.5/mt ex-works Ruhr. HRC in Italy was stable at Eur1,350/mt ex-works Italy.
— Benjamin Steven