EU HRC buyers question recent offer increase

European buyers of hot-rolled coil have doubts that the recently announced price rise reflects the current market state, although some factors support the increase, sources told Platts Jan. 10.

Earlier this week, a big European steelmaker increased its offers for HRC to Eur760/mt ex-works Ruhr.

Although the offer rate has been widely confirmed in the market as general target price of the mills in the north of Europe, buyers have been estimating achievable prices at significantly lower rates — between Eur670/mt and Eur730/mt ex-works Ruhr.

Platts assessed hot-rolled coil in Northwest Europe down Eur20/mt day on day to Eur700/mt ex-works Ruhr Jan. 10. The decline returned the assessment to the last week rate. Offer prices have been excluded from the assessment due to lack of actual trading after holidays across Europe.

Buyers generally acknowledge that market revival in Asia, effects from production cuts across Europe, high energy costs, lack of competitive import and some demand revival support the price rise. The sources, however, also cited reduced end-user demand and resistance of end-consumers to accept higher prices as negative factors.

“The efforts of the European mills to increase prices is mainly an attempt to mirror the situation in Asia,” an Italian trader said. “Obviously recovery in Asia creates a domino effect that helps Europe, but fundamentally demand in Europe remains weak. It is better than it used to be, but way below normal rates. It would make more sense for the European mills to keep production low and try smaller increases at a time to avoid resistance of the buyers.”

“The demand is getting better, but the price recovery is on shaky ground,” a German service center source said. “The situation is unstable, and the prices might collapse again. There are too many risks, and the buyers would not buy too much material to put in stock.”

Platts assessed domestic prices for hot-rolled coil in the south of Europe down Eur20/mt day on day to Eur680/mt ex-works Italy Jan. 10.

The assessment was based on tradable values heard at Eur650-700/mt ex-works Italy and offers reported at Eur760/mt delivered Italy.

Platts is part of S&P Global Commodity Insights.

— Maria Tanatar