EU HRC producers deliberate discounts on demand woes

A few German mills prepared to give substantial discounts June 14 alongside sliding offers in the Italian HRC market, with sources hearing mixed prospects from core industries.

HRC in Northern Europe was down Eur5/mt June 14 to be assessed at Eur930/mt ex-works Ruhr. In South Europe, prices were also on a slide, down Eur20/mt at Eur850/mt EXW Italy.

Offers were heard on the day at sub-Eur900/mt, with prices in the market cited in a broad range of Eur880-950/mt EXW Northern Europe. Offers from one Northern mill at Eur880/mt EXW were allegedly driven lower by higher exposure to the automotive decline, with most mills continuing to resist pricing below Eur900/mt.

Deals in the Italian market were heard at Eur850/mt EXW Italy, though buyers were heard already targeting Eur800/mt EXW for the next round of negotiations.

Sources talked about minimal demand across the market — citing high inventory levels and logistical issues in depleting stocks.

“There’s too much material in the market at the moment for any real purchasing activity,” said a distributor source. “Panic buying post war, as well as logistical issues with imports, are making it harder to reduce stocks — we still have material arriving through July to September.”

While market participants agreed distributor restocking activity was scarce, there were mixed expectations for demand from core industries — the automotive and construction sectors.

One distributor source said prices from one mill had actually increased, in opposition to the downtrend seen across flat steel products in recent weeks. The source said the mill had cited “strong development” from the automotive and construction industries as a core factor, but disagreed due to its own perception of relevant demand.

“Automotive is canceling orders and we’re seeing similar decline in the construction industry,” said the source. “Some projects have been pushed into next year, and they aren’t engaging new projects upon concluding old ones as they traditionally would.”

Another distributor source saw the same decline from the construction sector, though said automotive held strong prospects for the post summer period.

“Construction is dropping dramatically, but automotive does seem to be quite strong given heavy vehicle demand and a relaxation in semiconductor shortages.”

Automotive negotiations for Q3 and H2 were yet to conclude, with mills attempting to keep prices at H1 levels — around Eur1,050/mt EXW — according to a mill source. Mills were said to be in a stronger position than in previous negotiations, with OEMs setting a pattern of declining to take reserved volumes on real consumption.

Multiple sources said mills were “desperate” for orders — or at least needing to fill near-term orderbooks — with German mills apparently ready to accept substantial discounts on firm bids.

As current production levels contrast with muted demand, sources expected mills to announce production cuts — a service center source gave insight into the potential absence of announcements.

“Demand isn’t really dead, it’s just that everyone has too much stock,” said the source. “Mills won’t shut down facilities as when stocks do deplete, they could be caught out and miss opportunities if production doesn’t restart smoothly.”

— Benjamin Steven, Maria Tanatar