Italian hot-rolled coil (HRC) prices fell today as another mill acquiesced to lower prices, following the lead of one of its main competitors.
Argus’ daily Italian HRC index fell by €3.25/t to €603.75/t ex-works, while the daily northwest EU HRC index was static at €617.50/t ex-works.
The market is not yet concerned about the effect of a fire last week taking out a blast furnace at Acciaierie d’Italia, but there could be an impact on supply in the coming weeks. Although this is the smaller of the two furnaces, some buyers, especially larger ones, rely on index-linked supply from the mill.
Offers were reported at €630-640/t base delivered today, with deals concluded as low as €610/t base delivered, and some buyers, in negotiations, pushing for €600/t. But they doubted that they would achieve €610/t from a northwest supplier.
Yet the softness of the market is palpable, with lead times shorter now after nearly six weeks of disappointing sales. Some expect more activity by the start of June — if not, this could force producers to lower prices further.
On the import market today, an Indonesian offer was confirmed at $570/t cfr Italy. A Vietnamese offer was confirmed at $600/t cfr Italy. A Turkish mill was reported to have been reduced to $540/t fob, equivalent to just over $595/t cfr dumping included — this was not confirmed. An Indian mill offered pickled and oiled at around €615/t cfr Italy, after another one yesterday was offering at €610/t, but noted that the price needs to be at least $10/t lower to stimulate demand.
Around 30,000t of Saudi Arabian HRC was offered at around €565/t by a trader, for June shipment. Saudi material remains exempt from the EU steel safeguard. A trader said it sold Thai material to Spain at around €575/t base, also for June shipment.
In northern Europe, a mill source said it was selling small tonnages for July at €620/t ex-works. June production material from the same mill was offered by traders below €600/t, and some traders with material in hand said bids were even below €560/t ex-works, with liquidity very low. A buyer reported an initial offer at €640/t base delivered from an EU seller, while another said it had €620-640/t base delivered in hand but was waiting for lower.
Sellers conceded spot appetite was very low, but said their order books were sufficient to wait for buyers to return. One alluded to eurozone industrial production rising for the first time in two years in February.
In embryonic contract talks, mills have requested increases of around €50/t, citing upside risks from constrained supply and potential further curtailments ahead, as well as recent increases in spot prices. The higher cost of importing next year because of the carbon border adjustment mechanism (CBAM) is also a factor, according to sellers.
Some buyers secured January-June accords as low as low as €650/t, but others paid above €700/t. One mill has started its negotiations around €750/t, according to buy-side sources. One seller said if buyers do not want to pay the premium to lock in longer-term deals, they can buy closer to spot prices but on monthly contracts.
Automotive facing buyers surveyed by Argus said they could agree to a rollover — while prices have risen, euro-denominated costs have increased, giving mills more margin and thus greater room to negotiate on their half-yearly deals. Other original equipment manufacturers have already agreed to paying a rollover, with mills content with slight increases, sources said.
In the futures market, September and October traded on CME Group’s north EU HRC contract at €602/t and €608/t, while a third-quarter strip traded at €600/t.
By Lora Stoyanova
Source: argusmedia.com
