EU HRC: Imports weigh heavy

European hot-rolled coil (HRC) prices slipped today under pressure from cheaper import offers, which were aided by the strength of the euro relative to the US dollar.

Italy saw the biggest fall, given the big drop in import quotations. Argus’ daily Italian index slumped by €23.25/t on the day to €837.25/t ex-works, while the daily northwest EU HRC index slipped by €1.75/t to €843.75/t. The twice-weekly cif Italy HRC assessment dropped by €40/t to €720/t.

Italian buyers have been bidding to EU producers in line with historic differentials between domestic and Italian mill prices, exerting pressure on producers’ bullish offers.

They have managed, as a result, to secure tonnages at €830-840/t ex-works from a local supplier, and at a lower delivered equivalent from a north EU producer.

An offer was made today by a mill at €865/t ex-works for July delivery, but this was considered unworkable.

“The real issue is that, amid low level of demand, a gap of €80-100/t with imports is difficult to manage,” a market participant said. “Consider that more or less the base ex-works price is equal to the value of cfr. In the hypothesis that the lead times are comparable, the difference workable should be around €30-35/t.” “How can anyone buy at €880/t ex-works when imports are at €740/t cfr and below for everyone?” another one asked.

Import offers from southeast Asian mills were today reported at €740/t cif Italy. A large German buyer said it could access €700/t cif levels from India, although smaller buyers were still getting much higher offers from traders.

One India mill in particular has been aggressive, selling below this level to large buyers, but others were now offering at lower levels given a slippage in Asia.

The highest offers were heard around €750/t cfr, but these were no longer deemed workable for buyers. Given Indian tonnage was available on similar, if not quicker, lead times than some domestic producers, buyers had little incentive to place locally.

Northern mills were offering at lower levels into Italy, given firmer prices and slightly more liquidity of late. Apparent demand in the north European market remains very low, with few buyers in the market.

The CME’s north European HRC forward curve remained resilient despite softer sentiment. May traded down €5/t to €835/t, while June and July both nudged up by €5/t, to €810/t and €790/t, respectively. October nudged up by €10/t to €765/t.

Some buyers said there could be a shortage of HRC going forward, given the problems at ArcelorMittal’s plants and an upcoming outage at NLMK La Louviere’s hot strip mill for the second portion of its upgrade.