EU HRC: Picture mixed, demand low

The picture remained unclear in the European hot-rolled coil (HRC) market today, with steelmakers still pushing higher offers but buyers reticent given low demand.

Argus’ daily northwest EU HRC index rose by €3.75/t to €644.25/t ex-works, while the daily Italian HRC index nudged up by €1/t to €630.50/t. The twice-weekly cif Italy HRC assessment was unchanged at €600/t, while the weekly Italian cold-rolled coil (CRC) assessment slipped by €7.50/t to €722.50/t ex-works. The daily northwest EU CRC assessment was static at €730/t.

An Italian mill offered at €680-690/t base delivered Italy for HRC, and €790/t base delivered for CRC. Availability was reportedly for October, although some said September was still available. A price of €670/t ex-works was also mentioned, but a source said traders were offering custom-cleared port material at a significantly lower price, in some cases for thinner gauge material.

Service centres continued to compete for sheet sales as end buyers were reluctant to replenish, and with the end of the financial year approaching for some. One north European service centre said it was selling hot-dip galvanised sheet around €760/t base, coil equivalent, which is below replacement cost based on new production offers.

“When interest rates stay high, investment will stay low. That will have an impact on the economy and might lead to a longer recession period,” one service centre executive said. Another said it was very difficult to make sales given the competition. “We are checking if the requests of the European mills will be accepted. I am personally not confident due to the actual market demand,” an Italian SSC said, while another said it would be “almost impossible” to see price increases without demand rising.

“End-users are slow and even distribution is not buying much, as they want to stay as lean as possible. There are not much negotiations, [end-users] have limited consumption — everybody is in a wait-and-see mood and they buy in the last minute and then they have the negotiation power,” a seller said.

Automotive demand was still a concern, after flooding in Slovenia disrupted supply from one important supplier.

At the same time, import offers were uncompetitive, at least from origins without quota issues. One trader said demand for non-safeguard material — likely Saudi Arabian — was very strong, with a mill receiving hundreds of thousands of inquiries from European buyers.

There is a fairly broad consensus that the other countries quota will fill immediately upon resetting in October, and may well do the same in January because of the amount of material on order. Offers from quota-blocked countries, such as Taiwan, are still close to €600-610/t cfr Antwerp, but are not interesting for buyers. A buyer said it had $640/t cfr Italy available, but again for material under the “other countries” quota. Another one said €590-620/t cfr Italy was on offer.

Some Italian buyers have booked import material for arrival in December at $650/t cfr south Europe to be cleared under the other countries quota from 1 January, saying the price is worth the risk, which they assess anyway as not that high — if the quota does exhaust on day one, all of the material will be subject to a pro-rata duty according to the tonnage volume, meaning that only a few euros per tonne extra might be applicable.

Prices rose on fairly brisk trade in the futures market, with the strongest increases on the front month. September traded €13/t higher on screen to €663/t, while October rose by €5/t to €665/t and November by €9/t to the same level. December increased by €10/t to €670/t.

Source: Lora Stoyanova, Argus Media