European hot-rolled coil buyers were in wait-and-see mode Oct. 18 as distributors struggled to deplete stock levels, restricting potential for new purchasing.
Platts assessed hot-rolled coil in Northwest Europe down Eur10 on the day, following indications heard at the assessed Eur650/mt ex-works level.
Market participants generally reported tradable value at around Eur650/mt ex-works Ruhr. One trader saw the market even lower at Eur630-650/mt ex-works Ruhr.
A mill source agreed the price level was workable for black coil, as per the Platts specification.
Poor demand continued to plague the market, motivated by insufficient end-user consumption and relevant sales from distributors.
“Demand is the biggest problem right now,” the mill source said. “More mills need to cut production to give any support to prices.”
A trader source agreed, offering twin reasons for demand destruction – concern for further downtrend and difficulties with destocking.
“Distributors cannot destock no matter how hard they try,” the trader said. “They are still receiving expensive material booked earlier and have to sell it on at a discount. Anyone who has any need to buy now prefers to wait as they expect prices to fall further.”
The trader expected some companies to see financial difficulties in the near-term, as booked volumes could not be sold on in their entirety, restricting already reduced cash flow.
Distributors’ effective inventories were not reducing as quickly as necessary despite efforts to deplete stocks, with most losing profitability on prior purchasing without any substantial reduction in stock levels.
In the Italian market, Platts assessed HRC up Eur5 to Eur685/mt ex-works, toward sales reported at Eur700-710/mt ex-works level. Most indications were still lower alongside firm downward sentiment, however, at around Eur680-690/mt ex-works Italy.
Platts is part of S&P Global Commodity Insights.
— Benjamin Steven, Maria Tanatar
