European hot-rolled coil market moves sideways, remains under pressure

Buyers’ interest in purchasing new material continued to be muted in the European hot-rolled coil market as flat steel stock levels remain sufficient, sources told S&P Global Platts Nov 25.

Though most expect the market to remain stable, the availability of material from suppliers is a factor that market participants say could prevent any substantial price increase on the spot market.

“All buyers know this and don’t request much – for big buyers and big tonnages, actual deals are still in the range of Eur850-870/mt EXW Italy. Eur900/mt is only accepted for small lots,” said an Italian supplier, adding that Eur920-940/mt CPT South Germany ex-Italy and ex-Eastern Europe was also possible.

A German stockholder said they bought HRC at Eur920/mt delivered Germany from Eastern Europe and considered this the currently cheapest option.

Most sources put workable levels for HRC from Western European mills in the high Eur900s/mt EXW Ruhr, depending on volume.

Stockholding sources said that their inventory levels are sufficient and given most want to keep levels down for year-end, they are not in a rush to buy material.

The latest data provided by German steel stockholders’ association BDS showed that in October, flat products stocks grew as much as 4% in the month to the end of October, reaching 1.34 million mt, while sales volumes of flat steel fell.

“Some steel service centers have increased stock with cheap material and their 2021 contracts allocations are giving them enough material, that’s not gonna stop Jan 1,” said the stockholder.

“As long as auto is so weak, we will see the pressure. The main reason prices are holding up is the Black Sea region and Eastern Europe, they increased prices this October,” said the source.

The exposure of Eastern European mills to the automotive industry is overall smaller than Western European tier-1 mills that continue to struggle with volume cancellations by the automotive supply chain.

— Laura Varriale