Limited transactional activity was heard at increased price levels Aug. 31, although market participants warned that mills should hold firm so as not to undermine price recovery despite reduced demand.
Platts assessed hot-rolled coil in Northern Europe up Eur20 on the day at Eur780/mt ex-works Ruhr.
Distribution and producer sources alike reported offers and tradable values at the Eur800/mt level, ex-works Ruhr and Northern Europe.
Offers were considered firm in the Northern market, reinforcing the uptrend, and there was some acquiescence to higher prices from buyers in the form of small tonnage deals reported at Eur800/mt ex-works Northern Europe.
“We’ve seen some immediate positive feedback at the Eur800/mt level,” a mill source said. “I think the market sees prices as increasing so those who really need to buy will take purchases right away.”
Market participants were optimistic that higher prices would hold at least for the near term. However, looking to future weeks, this would require a pick-up in demand and solidarity from mills not to resort back to discounted offers. Overall transactional activity remained limited, especially in Germany.
“If the mills guys cut discounts in the first week of increased prices then the market isn’t going to function at all,” a service center source said. “Sustaining the increase requires solidarity and brainstorming otherwise it’s completely senseless.”
Demand remained the primary question, with some producers reportedly selling at or close to a loss in recent weeks to secure volumes.
Sentiment for demand revival was uncertain, although overall inventories remained high. Many buyers were heard to have restocked some material in the week ended Aug. 26 in order to take advantage of expiring, cheaper offers.
“We’ve seen some more inquiries, but it’s hard to tell if this is a genuine need for material or just probing for discounts,” a second mill source said.
“We’ll have to see in the next few weeks,” a second service center source said. “Real restocking could begin this month, but it’s possible everyone just tries to survive to the end of the year on small purchases.”
In the Italian market, offers were also heard higher at Eur800-820/mt ex-works Italy. Sentiments largely mirrored those in the Northern market, with skepticism about demand recovery and concerns over high energy costs.
Platts assessed HRC in South Europe up Eur20 at Eur770/mt ex-works Italy.
Platts is part of S&P Global Commodity Insights.
— Benjamin Steven, Maria Tanatar