EU HRC: Mills cut spot prices to move product

The northwest European hot-rolled coil (HRC) market was not immune to weakening global prices today, despite a raft of trade measures in place and firm raw material costs.

With Italian producers actively looking to sell spot product into the Benelux region at around €520-525/t delivered, northern mills were under pressure. Material from one Italian mill in particular was being offered at very competitive levels into northern Europe as it tried to strengthen its order book.

A tier-1 seller in the northwest was heard to be exporting into north Africa at $560-580/t (€496.85-514.00/t) cfr, depending on destination, as it looked for alternatives to offset slow domestic buying — although some said that this was normal business and not dictated by the market environment.

Domestically, customer enquiries were increasing but not translating into actual transactions, with people fishing for price quotes rather than looking to book, one German trader said. “We’re in discussions with customers, but they are not desperate to buy,” he said, adding that the softness was confined to spot business.

Demand was seasonally slow, with buyers not wanting to build stocks heading into the year-end. At the same time inventories were already sufficient, with further destocking and service centre margin compression expected in the next few weeks.

Concerns over the automotive market remained. “People are a little bit nervous around automotive contracts and demand, which will not be as buoyant as [the] past three years, where we saw 5-6pc growth,” one seller said.

A service centre source said construction activity could also slow into next year, which would impact consumer goods, and flat steels, as well as longs. Something had to give, with costs strong and finished steel prices falling, a trader said.

Despite the rundown in global coil pricing, imports were less of a threat as the reduction in domestic prices closed the arbitrage. And the weakening of the euro relative to the dollar — on the back of concerns over the Italian government’s clash with the EU — reduced import competitiveness further. One trader said €510/t cnf Antwerp was a workable price today.

The inaugural Argus daily northwest Europe HRC index was published at €535/t ex-works today.

Summary of market activity heard by Argus

  • HRC-EU: German trader estimates tradeable value close to €510/t ex-works
  • HRC-EU: Benelux-based seller estimates tradeable value close to €530/t ex-works
  • HRC-EU: UK-based trader estimates tradeable value of southern EU material at €500/t ex-works
  • HRC-EU: Offer for northwest Europe material at €570/t cfr Egypt, according to UK-based trader
  • HRC-EU: UK-based trader bought at €520/t ex-works two weeks ago
  • HRC-EU: UK-based trader estimates tradeable value of imported HRC at €510/t cnf Antwerp