EU hot-rolled coil buyers and end-users expressed growing frustration March 15 as mills passed production cost hikes downstream.
With mill offers steadily increasing, market participants expressed concern on the day for end-user profitability, especially considering the retroactive imposition of surcharges on concluded contracts.
“Customers are complaining daily about increasing prices, and new energy surcharges aren’t helping at all,” a service center source said. “We’re in a dangerous and challenging area — revising contracts risks credibility.”
A mill source confirmed concerns further upstream, reporting that inquiries as to the status of orders was “constant,” with customers anxious that orders would not be fulfilled because of energy and supply disruptions.
Some Northern European mills continued to return to the market week beginning March 14, with deals confirmed on the day as high as Eur1,500/mt. The deals were concluded for limited volumes and offered to longer-term customers — confirming reports that those holding established relationships with mills could better access the available material on the market.
Sentiments on future price direction varied, with one distributor source predicting current levels as near peak.
“I don’t see the demand for these higher levels continuing,” the distributor source said. “If you need material immediately, then yes, you’ll pay a higher price, but with demand gone from key industries like automotive, I don’t think further increases are likely long term.”
A mill source was less optimistic:
“Anything is possible, but prices already rose 300 to 400 euros in the last weeks without any uptick in demand — the increases we are seeing are based on speculative factors like whether material is guaranteed or at least likely to arrive.”
S&P Global Commodity Insights assessed the TSI for HRC for Northern Europe up Eur75 on the day at Eur1,400/mt ex-works Ruhr. HRC in Southern Europe was assessed up 10 at Eur1,310/mt ex-works Italy.
— Benjamin Steven