EU HRC softens as buyers lay low, market awaits safeguard decision

There was less panic among buyers in the European HRC market June 3, with sell-side sources noting an apparent relaxation in inquiries as more grow cautious with their decision making and look to import material to quell the effects of the domestic shortage, sources told S&P Global Platts.

Mills were also heard to have hastened their delivery of backlogged orders, in turn alleviating some of the supply and demand pressure.

“Backlogs are suddenly gone and mills are running out. It gets better every week,” a Benelux buyer said. “They are catching up now and I’m struggling with transport [logistics] because all of a sudden, material is ready!”

Over the last few days, some have pointed towards an evident lag in demand from the automotive sector, with its production largely hindered by a shortage of semiconductors.

“Automotive have less demand, and now there is material available for other customers,” the same buyer source said.

Meanwhile, a European mill source said demand was slowing down from the buy-side, but producers were not necessarily desperate to sell either due to tepid automotive demand.

“For three weeks we had serious problems – automotive needed more material. Then they needed slightly less because of semiconductors,” the mill source said, though he warned this would not solve the supply-demand imbalance in Europe.

“It has only diminished the problem; it does not solve it. When we once had a lack of 1,300 mt to sell, [today] it is now only 1,200 mt,” the mill source said.

Pricing volatility in China was also having an impact on market uncertainty, with Chinese prices increasing just days after a slight dip.

“China is showing its real face, they just manipulate the prices, curbing inflation,” a second European mill source said. “demand [in Europe] is still good and pricing is stable.”

In Italy, a trader said it was normal for the market to expect 2-3 weeks of weakness after such high increases but emphasized that he did not expect a pricing downturn so long as material remained scarce.

Italian mill offers were heard between Eur1,120-1,180/mt ex-works Italy, with many producers drastically slashing previously agreed volumes to customers.

“A customer of mine begged [Italian mill] for some 4,000 mt cold-rolled coil and hot-dipped galvanized, and [mill] kept him waiting 2-3 weeks only to confirm October delivery for just 400 mt,” the trader said.

Even as more import offers circulate, the same trader said people were still lying low until a decision about import safeguards was confirmed by the European Commission July 1.

“Protectionism is not going anywhere. They will keep safeguards as they are, and increase them by 5% which is nothing,” he said. “the main problem are the duties on HRC material from Iran, Russia, Ukraine and China. These are bif producers of HRC with availability at cheaper prices, but they still have strong duties.”

However, appetite for imports is still there, with the second European mill source confirming there were currently volumes in the port of Antwerp waiting for the new quota period to commence.

— Amanda Flint