EU producers accept lower HRC prices on low demand, decreasing import offers

Domestic prices for hot-rolled coil in Europe decreased further day on day May 20 due to weak demand and pressure from declining import offers.

Platts assessed domestic HRC prices in Northern Europe at Eur1,065/mt ex-works Ruhr, down Eur10/mt day on day.

Buyers have made some deals for smaller tonnages on HRC to restock certain specifications at Eur1,050-1,070/mt ex-works. The prices have not reached bottom yet, market sources said. Achievable prices have been estimated by market participants at Eur1,050-1,100/mt ex-works Ruhr, and offers have been reported at Eur1,100/mt ex-works Ruhr.

In Southern Europe, Platts assessed domestic HRC prices at Eur990/mt ex-works Italy, down by Eur10/mt day on day.

Following another decline of import prices and to stimulate buyers’ interest, Italian producers were ready to sell HRC at Eur980-1,000/mt ex-works Italy. One source also reported unconfirmed information that a domestic Integrated mill has already made deals at Eur980-1,000/mt, delivered, to Italian buyers.

Lower import prices have contributed to the domestic price slide, particularly in the south of Europe due to higher exposure to overseas coil.

Offers of HRC from India have been heard at Eur850/mt CFR Italy; from South Korea and Egypt at Eur870/mt CFR Italy; and from Turkey at Eur850/mt CFR Italy, including anti-dumping duties. This compared with import prices of about Eur900/mt ex-works in the start of the week.

“Import is moving down by Eur10-20/mt every couple of days,” an Italian trader said. “Naturally, buyers are not willing to risk and book. This threatens domestic prices. And as domestic demand is low, Italian mills have to adjust their prices down.”

Demand has remained low for flat steel across the EU because of a combination of high stocks across the supply chains and low demand from key end-consuming industries, including automotive.

“Everyone’s stocks are full — mill, distributors, end-users,” a Northern European distributor said. “And the volumes moving in the supply chain are so small that the mills have no opportunity to sell. They will have to cut capacities. That is discussed in the market, but no additional information was provided by either of the mills.”

“Demand is low, automotive is in big trouble due to components shortage,” an Italian service center source said. “But automotive is not the entire market. I think that we are in the period when panic buying earlier this year that resulted in extremely high stocks and weak automotive have been helped to drag prices down.”

Despite the bearish mood in the EU market, some sources believe that stabilization of prices in China might be a sign that the downtrend might end soon.

“Import prices from Asia need to stabilize,” a Southern European trader said. “I think we already see signs of stabilization in China, and then buyers will see that the freefall ended and they might book some volumes.”

“It seems that prices in China started to stabilize, so I think that is the first sign that European coil prices will stop falling too soon,” a producer said.

— Maria Tanatar, Benjamin Steven