The European HRC market showed further signs of stability Nov. 15, with prices in a stalemate amid automotive contract negotiations and fears of higher energy costs bolstering the bullish sentiment, sources told S&P Global Platts.
Despite the shortfall in automotive demand, European mills were trying to keep production running while also finalizing large volumes for lower prices, though market sources have said this was likely to cease in the new year once the semiconductor issues resolve.
A European mill source said he was already seeing positive signs for next year, with some major original equipment manufacturers announcing full schedules, suggesting greater production for first-quarter 2022.
“OEM schedules are promising – plants are running at full speed and there is a broader sense that the industry is improving,” the mill source said. “On the supply side, mills are willing to take the opportunity to do maintenance now that we’re managing the supply situation. We are optimistic for next year.”
The source said he was confident renewed automotive demand in Q1 would utilize the short-term overstocking many mills and distributors were currently trying to mitigate.
Ongoing problems with transport and packaging logistics, including a shortage of truck drivers in Germany and a scarcity in paper and wood, was also adding to the bullish sentiment as industry manufacturers remained severely hampered by these supply chain issues.
In the Italian market, a steel coils distributor was less expectant of higher prices for Q1, and instead cited prices for CRC and HDG around Eur20/mt lower than the current Italian spot market.
The source said he expected CRC prices to settle at Eur1,100/mt ex-works Italy and Eur10/mt higher for HDG. For HRC, Q1 prices were expected within Eur920-930/mt EXW Italy.
“They’ll be lucky to finalize at Eur920-930/mt for Q1 Italian market,” the distributor said. “We will continue to wait for beginning of next year. I have no confidence in final demand of the markets – there are some inquiries but not so much due to automotive call-offs.”
— Amanda Flint
