EU HRC pricing floor seen as nigh, with restocking expected for near term

Market sources expected that hot-rolled coil prices were close to the bottom June 30, with some buyers reportedly ready to return to limited purchasing once certain material would not suffer near-term devaluation.

In the Northern market, Platts assessed hot-rolled coil stable on the day, at Eur840/mt ex-works Ruhr.

Tradable value ranges were reported at Eur830-860/mt ex-works Ruhr from distribution sources. A trader source reported deals at Eur830-840/mt, achieved against offers heard around Eur850/mt, both ex-works Ruhr.

Buyers were heard as trying to achieve lower, citing offers heard at sub-Eur800/mt delivered Ruhr ex-Central Europe. However, Northern European mills were reluctant to negotiate prices at lower than Eur850/mt ex-works Ruhr, attempting to establish Eur850/mt ex-works Ruhr as a firm offer floor. Buy-side sources agreed that prices were in close proximity to a floor, with demand recovery expected in the near term for autumn orders due to restocking.

“I think prices are touching ground finally,” a service center source said. “There will be some demand recovery for September — obviously we won’t see crazy volumes or crazy prices like just after war in Ukraine started — but the second half of 2022 should be better, with market activity picking up again.”

Higher offers were also heard in the import market on the day, with offers reported at Eur780-800/mt CFR Antwerp ex-Asia by a trader source. Imported hot-rolled coil was assessed up Eur20/mt at Eur760/mt CIF Antwerp June 30.

The trader said some buyers were ready to return to the market but were reluctant to resume purchasing without certainty that material would not be devalued in the near term.

“Customers have registered interest in ordering material, but there’s still uncertainty over whether prices are truly at the bottom,” the source said. “They’re already unhappy that prices have decreased so quickly — they don’t want to repeat losses on future restocking.”

In the Southern market, achievable prices were heard at Eur730-780/mt ex-works Italy.

A trader source rejected the Eur730/mt level as unrealistic for domestic transactions, ex-works Italy, seeing tradable value higher at Eur750-780/mt ex-works Italy.

Competitive import offers were reported by traders at Eur685-695/mt CFR Italy ex-Turkey, excluding duties, with Japanese and South Korean material available at the higher end of import offers at Eur740-750/mt CFR Italy.

As in North Europe, the sentiment was that prices were close to the bottom, with distributors heard as likely to return in late July to restock for September. Mills were said to share that outlook, evidenced by a general lack of production cut announcements, against source expectations.

“This market is like slow hara-kiri,” a trader source said. “Either production needs to go down or demand up to put an end to it. Clearly, demand is an issue, and declining prices are a side effect.”

South European HRC was assessed down Eur10/mt June 30 at Eur770/mt ex-works Italy, according to S&P Global Commodity Insights data.

— Benjamin Steven, Maria Tanatar