EU hot-rolled coil prices fall further, mills mull production cuts

Hot-rolled coil prices in Europe fell further May 17, with one mill source describing the market in “freefall.”

Platts HRC in Northern Europe was assessed down Eur50 on the day at Eur1,100/mt ex-works Ruhr.

Northern sources reported offers on a range of Eur1,100-1,200/mt ex-works. Buyers were heard as rejecting offers at the Eur1,200/mt mark, with negotiations starting at Eur1,150/mt ex-works. A German mill was heard as offering at Eur1,050/mt ex-works, although sources were unable to confirm whether offers were representative of the wider market.

Mill and buy-side sources considered prices of Eur1,100/mt as achievable on the day, although most buyers refrained from restocking as prices continued to fall on the bearish trend.

“There’s no purchasing at all, we’re trying to sell out material as stocks are strong and prices are reducing – inventories across the market are too high and there’s no availability to store new stock anywhere,” a Danish distributor said. “It would only hurt us to buy right now.”

The source expected mills to cut production to suit market demand as buyers pushed to deplete stock levels before devaluation.

A mill source expected buyers to wait until September for substantive purchasing, expressing concern that price direction and muted demand would render current production levels unsustainable.

A second mill source agreed, citing communication of unspecified production cuts to customers. According to the source, production cuts now presented the only means to combat the negative price trend.

Reduced demand was heard extending into the import market, where competitive offers could not stimulate buyers to order material, given longer lead-times into October and market uncertainties. Import offers were heard on the day at Eur920-950/mt CIF Antwerp ex-South Korea and Egypt, with South Korean offers reported as particularly aggressive.

In South Europe, the Platts HRC was assessed down Eur50 at Eur1,000/mt ex-works Italy, according to S&P Global Commodity Insights data.

Offers were reported by market sources at Eur1,000/mt ex-works, with one trader source seeing prices close to the floor.

“Last week demand was zero, this week the market started moving with at least some deals done,” the trader said. “I think buyers have realized that prices are close to bottom, and they are unlikely to move down much further.”

A second distributor source disagreed on both demand and price direction, seeing prices as susceptible to further pressure from sliding import offers.

“The market is totally frozen — no enquiries, no prices,” the distributor said. “Buyers may return in June to restock but the war and the lockdown in China bring too many uncertainties. HRC imports could slide as far as Eur900/mt and drive the domestic market down further.”

Import offers were heard on the day at Eur900-950/mt CFR Italian ports ex-India and Turkey.

— Benjamin Steven, Maria Tanatar