Hot-rolled coil prices in Northwest Europe moved lower Aug. 4, as mills offered substantial discounts to secure September volumes.
Northern European HRC was assessed down Eur40/mt on the day at Eur800/mt ex-works Ruhr.
Distribution sources reported deals at Eur800/mt ex-works, though official offer levels remain at Eur840-850/mt ex-works Ruhr.
Poor demand was described as the primary factor motivating discounted sales, with distributor stock levels delaying traditional restocking periods. Some buy-side sources predict that substantial restocking may not kick in until late September-October.
Sentiments in the market are increasingly negative, both in terms of steel market fundamentals and the greater macroeconomic picture.
“There may be cheap prices, but no one has the possibility to buy as stocks are so inflated,” said a service-center source. “Price levels need to increase on rising production costs, but it just isn’t possible on current demand levels and end-user cost-of-living. Even if automotive demand picks up, the average European employee can’t afford to buy a car any time soon.”
Distribution sources said their customers held a wide spread of available offers — enhancing negotiating power — but that even the most competitive of offers would not attract business.
“Customers keep waiting – we’re having the same conversations with them again and again, all that changes is the figures,” said a distributor.
“There are a lot of question marks both now and going forward,” agreed another.
One trader described current market conditions as “catastrophic.”
A German service-center source reported a particular issue with transport, with shipping costs having increased four-fold from Eur20-90/mt. Transporting volumes via truck was posed as an alternative option, declined as unviable due to a shortage of drivers.
“It’s really hard to see signs of recovery, the market has undergone huge pressures this year – and they show no sign of relenting,” the source said.
In Italy, the picture wasn’t much brighter, though the HRC price was stable on day, assessed at Eur770/mt ex-works Italy.
With the region at the outset of August mill shutdowns, very little activity was reported, with only limited back-to-back deals heard between distributors and end-users.
“Honestly speaking, I understand why their cautious to buy,” said a trader source. “Stocks are high, and everyone is having cash flow issues, it makes no sense to do larger deals in these conditions.”
One mill was reported as attempting offers of Eur800/mt ex-works in the market for September rolling, in line with source expectations of a slight price rise in September.
Like the Northern market, however, appetite for an increase was dubious on the recent performance of key industries, like white goods, automotive, and construction.
— Benjamin Steven, Maria Tanatar
