EU HRC: Market contemplates flood damage

The northwest European hot-rolled coil (HRC) market was digesting the impact of devastating flooding today, particularly in the Hagen region of western Germany.

Hagen, in North Rhine-Westphalia, was severely hit and is home to some of Germany’s largest automotive-linked cold-rollers, as well as other service centres. A state of emergency has been declared, after the river Volme rose 3-4m in the last few days, bursting its banks.

At least one cold-roller and several service centres in the city declared force majeure because of damage to sites and rail lines. Some could not access their plants to ascertain the extent of the damage, but expected to be off market for incoming and outgoing shipments for a few weeks at least. Pictures of one service centre showed over 1m of dirty oily water and debris infiltrating the works. Should site electronics be impacted, it could take several weeks to rectify, an industry source said.

Those affected were already trying to find surplus cut-to-length and processing capacity in Germany or the Netherlands to keep servicing customers during the downtime.

Service centres further south in Germany reportedly could not receive material by barge because of elevated water levels on the Rhine, and there was concern this could hit river transportation. Full reservoirs in Sauerland and Eifel are likely to be released into rivers, which could exacerbate the situation.

Traders have already started fielding calls from end-users with tonnes stranded at the sites. Sheet prices could be pushed up by the constraints, depending on the extent to which flooding has impacted end-users.

There was talk of hot-dip galvanised lines at one German mill being affected, although a spokesperson said this was not the case.

In Belgium, logistical problems were still impacting deliveries to service centres. One cold-rolled and hot-dip galvanised producer sent employees home yesterday and planned to reopen tomorrow. Another was experiencing difficulties as incoming feedstock transportation was disrupted.

Argus‘ daily northwest EU HRC index slipped by €4.50/t to €1,175/t ex-works, while the daily cold-rolled coil (CRC) assessment was static at €1,310/t.

In Italy, market participants were surprised by the brief closure of a major reroller after a fatality. The site will be closed until 18 July, after the accident yesterday morning.

One Italian mill was still offering September delivery this week, having cut sheet prices into Germany by around €30/t. Others were reportedly booked until October and beyond for certain grades. Headline offers were still around €1,120/t ex-works, although they were negotiable amid quiet demand. Argus‘ daily Italian HRC index was static today at €1,085/t. Given the disparity between Italian and northwest European levels, more tonnes are expected to be sold south to north — if possible, given the logistical difficulties.

Imports were still being quoted as much as €150/t below domestic prices, although some said this could change in light of growing talk of export restrictions in China. Market talk in China today suggested the country could implement export quotas, with a 20pc tariff for HRC shipments over the allowed level, although this was not yet official.

An Italian mill sold a small lot of hot-dip galvanised at €1,350/t delivered for November, although buyers were eyeing Asian material which was closer to €1,200/t base delivered. Asian CRC was offered into Italy and Antwerp at €1,120-1,150/t cfr, albeit for November-December delivery, at a steep discount to domestic quotations.