European HDG availability improves, market sees lower prices

European mills are finding their negotiations with automobile manufacturers more challenging for 2021, as chronic shortages of semiconductors and chips minimize the number of volumes taken, in turn hindering the automobile production process, sources said.

On the import side, HRC and HDG third quarter quotas are set to be exhausted by Oct. 1, with the possibility of buyers incurring a 25% duty on the material.

“The market is not as lucrative because of the automotive stoppages. The chip problem will impact the home appliance segment, so there will be problems with this sector,” an Italy-based trader said, though he did not expect prices to drop. “I don’t see why prices should go down anytime soon, because we don’t have a lot of quota [allowances], so availability is still tight.”

The lack of automotive demand was a sign of relief for mills with productivity and delivery issues. The freeing up of HDG on the market has meant that mills can afford to focus on processing late deliveries by reallocating volumes initially promised to automotive customers.

“We are normally fully booked until end of the year, but we have possibilities for small HDG projects,” a European mill source said. “Customers already have booking for Q1.”

The same source said they were able to sell CRC material for a lot more than HDG, with little competition on CRC due to tight market availability.

Prices for HDG were heard as low as Eur1,270-1,280/mt ex-works Ruhr, with deals secured at Eur1,290/mt ex-works Ruhr.

Automotive contract negotiations for 2021 were still at early stages, but current offers from mills have given clearer insight to the future of domestic spot pricing, with prices heard at Eur1,100/mt, nearly double the proposed contract prices intended for this year.

“Automotive negotiations will show us how prices will go, people won’t want to pay more than this,” a German distributor said. Italy is still feeling effects of import prices, so we are sitting back – our management is fearful of bigger stocks.”

— Amanda Flint