EU HRC: Mills still hunting for orders

The northwest European hot-rolled coil (HRC) market continued to slip today, with some domestic sellers keen to move tonnes because of sluggish demand and a drop in orders from their own service centres.

Argus‘ daily northwest Europe HRC index fell by €2.50/t to €464.50/t ex-works, its lowest since launching on 12 November last year. The daily Italian index was unchanged at €443/t ex-works. The northwest forward curve nudged lower, with the front month slipping to €467.75/t. September dropped by €1/t to €463/t, while October nudged €0.50/t lower to €463.50/t.

Service centre procurement executives that were working had no desire to go long, given the uncertain price outlook and seemingly intensifying trade war, with China retaliating against the latest US tariffs.

End buyers were still cautious and ordering their minimum requirements, which was reflected in service centres’ approach to hot-rolled procurement. One Benelux-based stockholder said this week was worryingly quiet and that he had postponed planned purchases as a result. He also anticipated further declines, given lower prices globally.

Third-country HRC was offered at €465/t cif Antwerp, but this was not attractive enough to entice buyers. Price pressure stemmed more from domestic mills than their foreign competitors, although weakening prices elsewhere did impact sentiment somewhat.

Traders were having some success with Indian cold-rolled coil (CRC), which was offered at €525/t cfr Antwerp for November delivery. There was some concern about India’s recent competitiveness — it has been dominant in Vietnam and offering aggressively into Turkey — and whether this was a blip caused by the monsoon season or structural oversupply relative to demand.

A Turkish mill cut its HRC export offer to around $480/t fob and was widely expected to drop lower given slack demand.

There was increasing concern over the creditworthiness of some automotive sub-suppliers given the protracted weakness in the global sector. Sub-suppliers in Germany have announced restructurings and profit warnings, and a Belgium-based sub-supplier issued a notice today about temporary layoffs in response to local press reports. If automotive remains weak over the rest of this year, it could continue to impact sub-suppliers.