EU HRC prices stable, but sentiment strongly negative on oversupply

Domestic prices for hot-rolled coil remained unchanged in Europe Oct. 25, though market participants expected further price declines amid oversupply concerns.

Platts assessed hot-rolled coil in Northwest Europe at Eur650/mt ex-works Ruhr Oct. 25, stable day on day.

The majority of buyer and mill sources reported tradable value at Eur650/mt ex-works Ruhr.

Some buyers, however, said that they were unable to achieve such prices and have been receiving official offers at Eur735/mt delivered Germany or at Eur700/mt ex-works Northern Europe. However, those sources acknowledged that prices around Eur650/mt ex-works could be achieved on firm bids for large tonnages.

End-users and distributors suffer from high stocks of coil booked earlier this year at high prices. Distributors have been failing to get margins on their sales or to destock needed volumes. This, combined with general uncertainty in the market caused by the current economic and geopolitical situation, has forced buyers to hold back from restocking.

Some buyers say they have enough material in stocks to avoid new purchasing until mid-first quarter 2023.

As widely agreed at the EuroBLECH 2022 trade fair in Hanover, Germany, buyers say that further production cuts are needed to balance supply and demand. The capacity reductions already introduced by the European mills were deemed insufficient to bring balance to the market, especially as related to German production.

In addition, taking into account the recent decline of energy costs, sources say mills have room to give additional discounts. The majority of the sources anticipated prices settling at Eur600/mt ex-works Northern Europe in the near term, while some believe prices will move below the Eur600/mt mark.

“Mills are definitely covering their costs,” a German distributor said. “Otherwise they would have not been able to move prices down as rapidly as they did in October.”

Platts is part of S&P Global Commodity Insights.

— Maria Tanatar, Benjamin Steven