The EU hot-rolled coil market remained in a wait-and-see mode May 10 as buyers refrained from restocking and mills saw threats to production on the current price direction.
HRC in Northern Europe held stable on the day, assessed at Eur1,170/mt ex-works Ruhr. HRC in Italy was down Eur25 at Eur1,125/mt ex-works Italy.
In a market characterized by uncertainty, buyers were reported targeting Eur1,150/mt ex-works Ruhr, although demand was still considered minimal.
A trader source said mills were ready to accept lower bids on reduced demand.
“Buyers are targeting Eur1,150/mt, and I think some mills are ready to accept this level with certain customers,” the source said. “There is some demand revival expected, but given the poor prospect of automotive and the generally unstable situation I don’t think mills have a chance to keep prices at previous levels.”
A distributor source confirmed reduced demand, saying that exhausted credit lines due to record high pricing in recent months had reduced buyers’ purchasing capacity by as much as 40%.
“There is no real restocking activity now,” the distributor said.
Import material was heard to be unattractive to Northern buyers despite competitive offers as low as Eur960/mt ex-Taiwan. Long lead-times and logistical issues both in ports and with deliveries on land were cited as major factors by the distributor source.
“Buyers in Germany are not really booking imports as it is too risky with long lead-times into September earliest, and troubles with logistics,” a mill source said.
High stocks across Northern Europe were reported as a major barrier to bookings, with mill production cuts looming in the static market.
“Energy costs are extremely high – I think current coil prices are really close to the point where mills will have to shut down production,” the mill source said.
Demand in the Italian market was heard as higher on smaller inventories, but the increased interest was directed more toward the import market than the domestic market, according to the same mill source.
“Stocks in Italy are a bit lower, so the activity is higher there, but pressure from imports offsets any positive influence of the restocking,” the mill source added.
A trader source reported a deal on the day at Eur950/mt CFR Italian ports out of the Far East.
— Benjamin Steven, Maria Tanatar