EU HRC: Mills hike offers further

European hot-rolled coil (HRC) prices climbed today as more participants returned to the market and mills hiked offers further.

The market leader tabled an offer of €760/t for March delivery HRC, up €30/t on last week. As a result, some smaller producers said they would be targeting €780/t delivered base into Germany and the Benelux. One seller suggested the market was around €715/t today, while a German buyer said several thousand tonnes was at €700/t on an index equivalent basis from domestic mills.

There was an expectation some of the rises would stick with costs for raw materials scrap and coking coal firming in recent days.

With slab sales into Turkey expected around $580/t cfr, plus rolling costs, freight and duties, this would equate to around €680/t cif Europe for HRC. Indian offers were also heard at a similar level from traders. Some said this made €780/t seem slightly aggressive, despite the apparent momentum in the market.

There was more talk of half-yearly contracts into the automotive supply chain being finalised around €800/t from one large producer.

Argus‘ daily northwest EU HRC index rose by €19.25/t to €708.25/t today, while the daily Italian index also surged by €19/t to €669.25/t ex-works.

An Indian mill offered at €680/t cfr south Europe today for HRC, €710/t for pickled and oiled material and €735-740/t cfr for cold-rolled coils (CRC). Other Asian mills were not yet offering, but were mulling increases, which traders said would be achievable, especially if domestic mills hold firm. A Korean producer was not offering HRC, but the price idea for CRC stood at around €740-750/t cfr south Europe. In any case Asia-Pacific producers may offer April shipments, which would mean early June consumption — too far in time for many buyers, which prefer to purchase on shorter lead times.

Some CRC was heard last sold from India at €715/t cfr south Europe. A bid for CRC to an Asian supplier was heard at €720/t cfr Italy. Traders reported that in the last week of December buyers had the option to purchase top-up HRC volumes on previous orders — done at €630/t cfr — at €650-660/t cfr. Some buyers were now looking to purchase at these prices, whereas others were waiting for offers from Egypt and Turkey. Late today some higher Turkish HRC offers were heard at $715-720/t fob, up from $700/t fob on Friday. Egypt last was on the market at €650/t cfr.

Domestic Italian producers appear to have lengthened their lead times, with material available for March deliveries, although one claimed it was sold out for the first quarter for some products, with offers at €700/t delivered for HRC and €800/t for HDG, which marked a €30-50/t increase on December. Participants said they expect the market to reach that level in the near future, but prices were not there yet. One sell-side source said customers were seeking more tonnages than previously agreed. Another sell-side source said they have achieved sheet sales at €70-80/t increase compared to the lowest levels in December.

Some said the recent uptick was driven by apparent demand from service centres that had not purchased for several months.

In the futures market, February traded at €740/t twice during the London morning on the CME Group’s north European contract. A February-March spread also traded at -€5/t, with the outright priced as at €745 and €750/t. A second quarter/third quarter spread later traded at €-10/t, with the outrights at €755/t and €765/t. Later on January traded at €730/t, after news of physical trades at €700/t spread.

Futures firm later in day

Prices also firmed on screen later in the day amid brisk trade. January traded at €730/t, up marginally, while February and March rose by €16/t to €765/t and €775/t, respectively. Further out, October-December was trading at €775/t, down €5/t from 6 January’s settlement.

Lora Stoyanova, Argus Media