EU HRC: Italy leads declines

European hot-rolled coil (HRC) prices slipped again today, despite domestic mills trying to withhold offers with one eye on contractual talks for July-December volumes.

Argus’ daily Italian HRC index slumped by €11.25/t to €731/t ex-works, while the daily northwest EU HRC index nudged down by €2.75/t to €772/t.

Italian participants said it would be increasingly difficult to move tonnes at the €750/t target price recently floated by at least once mill, considering continued softening in the import market. Some said €700-750/t was the tradeable level, but liquidity is slim, with buyers in north and south Europe quiet on low demand from their own customers.

“The whole market is waiting,” a service centre source said today. “We were waiting versus supplier, and customers are waiting versus steel service centres. There are no big requests on the market. No one is putting significant volumes on the table.”

An east European supplier offered to an Italian buyer at €750/t base delivered, but the buyer deemed it too high and, in negotiations, the seller wanted to keep the price in the €700s/t. Eastern tonnes have been offered into north Europe at about €780/t base delivered, with small tonnes reportedly sold at this level.

An automotive sub-supplier said an Italian mill is asking for additional contract tonnage, which it interpreted as “a signal that the demand is weak”. “Many SSCs are also calling us to get the orders, but we are noticing a big gap in the price between the EU and the import material,” the sub-supplier said.

Some buyers today said they were waiting for tier one import mills in Japan and South Korea to reach €600/t cif Italy before they deem the market to have bottomed out. An offer for Japanese HRC was made today at $680/t cif, and cold-rolled coil at $770/t. Turkish material was reportedly available at €650/t cfr Romania, including duties. A similar price, but on an fca basis, was offered into Antwerp for a small tonnage arriving in July.

“It is not completely clear what will be the bottom price,” a seller said. “Once we reach it, there will be a lot more activity.”

In the meantime, sheet prices in Italy have slipped further, with participants putting the level today at €830-860/t delivered, underpinned by high competition between service centres, although a sale was reported at even less than this. Some buyers were targeting €800/t delivered, and some expected the market to head this way. Competition was also fierce in the north, with service centres focused on destocking because of low demand, increasing arrivals from mills and concern over future price direction.

In north Europe, there was talk that one producer offered €750/t, but this was not confirmed by buyers or the mill in question.

Import offers were heard in a wide range, but all substantially below domestic prices. Japanese HRC was offered at about €650/t by trading firms that had purchased at lower levels. South Korean HRC was offered at about €620/t cfr, but for small tonnages, for July-August shipment and clearance into the October quota.

In the futures market, the forward curve remained in a clear backwardation. June traded at €695/t and July at €670/t, while a July-August spread traded at €15/t, with outright prices at €675/t and €660/t, respectively.

Lora Stoyanova