Europe HRC prices down on lack of demand, oversupply

European hot-rolled coil prices fell on Thursday April 28 with market participants becoming increasingly convinced that the market was due for a significant move downward, sources told Fastmarkets. Fastmarkets calculated its daily steel HRC index, domestic, exw Northern Europe, at €1,270.56 ($1,345.59) per tonne on April 28, down by €28.61 per tonne from €1,299.17 per tonne on Wednesday.

While several mills were heard to be offering HRC at €1,300 per tonne exw, some offers were said to be as low as €1,280 per tonne exw. Even so, most buyers were looking to pay closer to €1,200 per tonne exw.

Fastmarkets calculated its corresponding daily steel HRC index, domestic, exw Italy, at €1,216.67 per tonne on Thursday, down by €19.33 per tonne from €1,236.00 per tonne on April 27.

The index was based on offers at €1,250 per tonne exw and bids and estimates at €1,200 per tonne exw.

Trading remained thin in both regions, with buyers adopting a wait-and-see approach. End-user demand was slow and inventory levels were high enough to give buyers flexibility regarding purchases.

“There have been no deals [recently] because we have no need to buy anything,” a Northern European distributor told Fastmarkets. “Stocks are so high, we don’t have to buy anything for the next two or three weeks at least.”

While some end-markets were expected to show better demand from the second half of May onward, the outlook for the key automotive industry was not bright, with some now predicting that it would not revive until the end of the year at the earliest. The sector was being constrained by a shortage of microchips and other components, the latter mainly due to the consequences of Russia’s invasion of Ukraine.

In addition to slowing underlying consumption, buyers were also aware that mills were under pressure to reduce prices, and this expectation was adding to the lack of prompt buying interest.

Conversely, uncertainty over the cost of energy and raw materials, particularly in the wake of Russia halting gas supplies to Poland and Bulgaria this week, may damp mills’ willingness to reduce prices, sources warned.

Nevertheless, mills were faced with an oversupply problem, and buy-side sources suggested that they were seeking options to clear this without lowering domestic prices.

One distributor reported rumors of mills having slowed production rates, while anther mooted the idea that mills could look to export material, albeit at prices substantially lower than domestic levels. High freight rates would put even more pressure on prices, however.

Competitively priced imports were providing buyers with yet another option, although long lead times made this an impractical alternative.

Material from Japan, South Korea and Taiwan was reported to be available at €1,000-1,050 per tonne cfr Italy, but with September delivery times. This compared with early in the third-quarter for domestic material.

Offers from India were heard at €1,000-1,030 per tonne cfr Northern Europe.
Published by: Ross Yeo