Europe HRC price gap widens as Italy sees more imports, higher stocks

North European HRC prices were heard slightly lower June 28 following a recent increase in mill offers last week, with the pricing gap between North and South widening as more imports entered the Italian coils market, sources told S&P Global Platts.

North European HRC prices were assessed Eur2.50/mt lower at Eur1,187.50/mt ex-works Ruhr June 28, and in the Italian market, HRC prices were stable at Eur1,130/mt ex-works Italy.

The pricing gap between Northern and Southern Europe now stands at almost Eur60/mt, and is expected to increase as more imports initially booked during April-May are expected to enter the Italian market during the summer, giving the impression of higher stocks.

The announcement of a Eur30/mt increase on HRC from ArcelorMittal was not a complete surprise to the market, with higher offers from mills already heard several days prior.

“Before ArcelorMittal announced this [offer increase], sellers were selling for Eur1,200/mt and higher,” a German mill source said. “The problem is no one has anything to sell.”

The mill source added Q4 transactions were possible between Eur1,170-1,200/mt for 3000 mt, though there were limited volumes available, with customers now inquiring for Q1 volumes.

Despite the cautiousness exercised among buyers, sell-side market participants remain optimistic that European steel prices will see no downside due to the lack of available steel, limited stocks and the fact suppliers remain well-booked for the next half of the year.

One German car manufacturer was heard to have restarted production, according to the same mill source, which suggested that the automotive slowdown would not last long.

“The auto issue, nothing dramatic, full order books, have problems with raw materials. But Volkswagen stopped their vacation and they are not trying to produce,” the mill source said.

In the Italian market, prices were heard to be stable after falling Eur5/mt June 25, with high storage levels and an influx of newly arrived imports another bearish factor.

“There are a lot of orders from imports that will arrive in the summer,” an Italian service center source said. “For the moment, Italy mills aren’t interested to sell cold-rolled coil and hot-dipped galvanized, but in my opinion the situation could change in Q4.”

— Amanda Flint