EU HRC prices decline further on oversupply, low demand

Domestic prices for hot-rolled coil in the EU moved down again on June 1 due to supply exceeding the demand in the region, sources said.

Platts assessed HRC in Northern Europe at Eur975/mt ex-works Ruhr, down by Eur5/mt on day, according to S&P Global Commodity Insights.

Offers of HRC have been reported at Eur970-980/mt ex-works Ruhr, and a majority of sources confirmed that the achievable prices were in the same range. Some higher offers of Eur1,000-1,025/mt ex-works Northern Europe have been heard from other mills.

One source also reported unverified transactions at Eur950/mt ex-works Northern Europe, but the information was not widely confirmed. Some sources, however, believe that domestic prices in the Ruhr area and Northern Europe would reach Eur950/mt ex-works in either short- or medium-term.

And hot-rolled coil in South Europe was assessed at Eur930/mt ex-works Italy, down Eur10/mt day on day, according to S&P Global Commodity Insights data.

Italian mills have been offering HRC at Eur900-940/mt ex-works. Lower offers were available from a steelmaker that had recently revied its priced retroactively, cancelled orders and also reportedly facing some technical issues, so buyers have not been looking to make the deals despite lower prices.

One source said that domestic HRC prices in Italy might drop to Eur850/mt ex-works before the floor is reached.

“I think that with demand as low as it is now and with no hope for automotive steel demand recovery any time soon, we will see domestic HRC at Eur850/mt ex-works,” an Italian distributor said. “Demand is close to zero. Buyers need to restock. But even when restocking will start supply will be way higher than the demand.”

Market participants expect that trading activity might rebound slightly soon as buyers would need to restock for September. Although the traded volumes are not expected to be substantial, at least the trade flaws would increase from minimal over the past month, sources said.

“Mills did not fill order books for June production yet, so they are desperate for orders. And they need to manage excess capacities as soon as possible before prices dropped further down,” a Northern European trader said.

Short lead times from all European producers – majority of mills have June-July production coil – have resulted is stronger competition between steelmakers from different regions, sources said.

“Central European mills usually had shorter delivery and lower prices available compared with German mills. But now they all compete for the same timeframe,” a trader said.

Central European mills were reported to sell HRC to Italy at Eur880/mt delivered and to Northern Europe at Eur870/mt delivered.

Offers of import HRC to the south of Europe have also moved down slightly, although the pace of decline has slowed down.

Offers of HRC from Turkey, including anti-dumping duties, and Asia have been heard at Eur835-860/mt CFR Italian ports.

Indian suppliers have been offering boron added HRC to Italy at Eur800/mt CFR. The addition of the alloy is needed to allow the steelmaker to avoid export duty imposed recently on HRC in India.

Despite the competitive price, European buyers have been showing little interest in the material.

“People remember similar attempts of Chinese mills to sell boron added coil in the past, they did not end well,” an Italian producer said. “And you cannot really weld the material with boron, and if you cut it for something you will still need to weld it and you still will not be able to do it.”

— Maria Tanatar, Benjamin Steven