EU HRC lower as buyers yet to resume purchasing

EU HRC prices remained lower as buyers reportedly monitoring trade flows over price negotiations as a demand marker.

Hot-rolled coil in Northern Europe was assessed down Eur10 at Eur1,250/mt ex-works Ruhr. HRC in the South was also down on the day, at Eur1,160/mt ex-works Italy.

Sources reported a continuation of the waiting trend characterizing the market recently, with buyers sitting on strong inventories, and mills keen to keep prices high against rising production costs.

A buyer source reported mills as “desperate” for orders given reduced demand and cancellations from the automotive industry.

“Mills suggested full capacities for Q1-Q2 on automotive orders and rising energy costs, and even when those contracts were cancelled they were optimistic on demand recovering to fill the gaps. Now, however, demand is still gone and mills are desperate for new orders – we’ve been told we could still secure Q2 volumes if desired,” the source said.

The source considered Eur1,200/mt ex-works as achievable on larger volume bids.

A trader source confirmed the flat steel market as “dead silent,” reporting buyers as focused more on trade flows and stock levels than speculative pricing due to continued downstream demand and strong buyer inventories.

“Buyers are monitoring stock movement over prices. Overall demand is not bad, the market is just a bit stuck now. A lot of import material arrived in the first quarter so buyers need to evaluate the pace at which stocks are depleting before they make any fresh deals.”

Various sources expected buyers to return to the market by the end of May to restock.

While end-user demand was reported as relatively strong, sources were more pessimistic about the prospects of the automotive industry.

Mill and buyer sources shared pessimism for long-term demand for automotive, in response to talks that a large automotive plant would return to the Italian market in the near-term.

“We may see short-term demand pick-up to cover orderbooks, but I don’t see end-consumers as in any real position to stimulate the industry in the long-term. The cost-of-living crisis is going to get worse before it gets better – who’s investing in a car in this market?” said the mill source.

— Benjamin Steven, Maria Tanatar