Europe HRC prices stabilize as market mulls possible capacity moves

The European hot-rolled coil market showed further price stability July 29 as buying activity became more muted because of full order books and expectations of greater capacity coming into the market from imports, sources told S&P Global Platts.

Most buyers and distributors were waiting for material booked several months prior to be delivered, with order books already full for the year. Longer delays because of the severe floods in Germany and the Benelux countries were another factor contributing to the wait-and-see mode in the market, with buyers cautious of needing to wait even longer for already late orders.

“We are waiting for material to come in,” a German distributor said. “This was impacted by the floods. Trucks and trains can’t come through their usual routes. We don’t order now because we have enough. Sales are down, inventories are increasing. That’s why we don’t have necessity to buy.”

Travel logistics in Europe were still in dire straits, with a critical lack of available train wagons and trucks made worse by the flooding.

“They have produced the material on stock but they can’t get it to us,” the distributor said of mills. “It makes no sense to order new material.”

Steel capacity was also heard to be increasing, with greater availability from imports, specifically from Serbian mills and Brazilian producer Usiminas.

In the Italian market, market activity was already starting to slow ahead of August, when most steel outlets close for the holidays.

Most volumes changing hands were committed to contracts, with few spot transactions and the expectation of further softening on the horizon.

“We’ve had [cheap] offers from Korea, and then rerollers from Italy have also offered some discounted prices to customers,” a European mill source said. “We’ve been having stable prices, don’t see anyone with big deals.”

July was also reportedly a good month for sales in Italy, with stockpiles also relatively high and inquiries for Q1 material having already started.

“Customers are pushing for price decreases and are not buying,” an Italy-based trader said. “I am happy because they will pay more later. The gap between imports, Italian and European mills is still very high, but I have the feeling that customers didn’t buy much from imports.”

Overall, Italian sentiment pointed toward a decrease in prices, less demand and the possibility of more capacity available, with one major European mill having restarted a blast furnace and now heard to be offering competitive prices.

— Amanda Flint