The Italian coil market remains mostly flat with stable-to-weak activity, with no change from the beginning of the month. Slow consumption and softening downstream prices are resulting in a gradual depletion of coil stocks at steel processors, Kallanish notes.
Buyers and producers alike are waiting for the confirmation and publication of the quota allocations ahead of the new safeguard implementation on 1 July. Despite some information being published, there is no certainty on quota details with only days to go before the deadline.
“Before being able to comment on it, we have to wait for the official definitive version of the document from the EU. We had heard of a certain preference for Free Trade Agreement countries, which should be around eight, and for the others a global quota regulated on a first-come first-served basis. A possible cap is also probable,” one large steel buyer comments.
“I can hardly believe we have and will have no news. These people are incompetent and do not realise the consequences of their actions,” one service centre source says. Other sources have expressed considerable frustration with the European regulators.
Currently hot rolled coil (HRC) buying appetite remains limited and stocks are well filled, but several processors expect to return to purchasing in September.
A mill source says that enquiries are already picking up, while a steel processor anticipates the sector will resume buying next month.
Shortages are expected for certain non-standard grades and dimensions, including embossed material. One service centre source tells Kallanish that a rush to purchase in Europe is anticipated in September, while imports of non-standard sizes will continue in July though such material is unlikely to clear customs before 1 October.
“We will only buy in Europe, but we’ll have no strong contracting power, which will push prices up throughout the value chain. At this stage, however, I don’t know how our clients will react. They will probably reduce their volumes as many cannot afford to buy at high prices,” the source says.
One trader believes Brussels to be withholding information on the new quota distribution deliberately. “Their aim is to reduce imports. Because of the uncertainty, nobody is importing, apart from the large companies that have no choice, and even the large companies are now waiting,” they suggest.
Italian coil prices are stable week-on-week. HRC is averaging €670-680/tonne ($767.8-779.3/t) base ex-works, while cold rolled coil (CRC) and hot-dipped galvanized (HDG) are at €790-810/t base ex-works, sources suggest.
