European HRC buyers continue to postpone restocking amid slow end-user demand

Hot-rolled coil prices in Europe remained broadly unmoved on Thursday February 1 amid persistently slow trading, while buyers have expressed doubts about the continuation of an uptrend into the second quarter.

Quiet trading conditions prevailed in the European HRC market on Thursday, with buyers continuing to refrain from restocking, citing “sufficient” inventories and poor demand from the end-user side.

“Like 80% of buyers are keeping quiet, sitting on inventory and focused on destocking. Additionally, people are worried about a potential downtrend in the second quarter and are trying to minimize their purchases [of HRC],” a mill source said.

In spite of the subdued activity, domestic HRC prices have held firm, rising throughout January, on support from reduced supply.

“There is no pressure to drop prices – there’s no oversupply and import options are limited due to safeguards and Red Sea shipping issues,” a second mill source said.

Recent steelmaking capacity restarts in the market during January have triggered concerns among buyers that increased supply might hamper the uptrend in prices toward the end of the first quarter or beginning of the second quarter.

“That’s one of the reasons why buyers are waiting, they are unsure about the uptrend’s sustainability,” a steel service center source said.

Deals were reported at €760-770 ($823-834) per tonne ex-works in Germany and Benelux area for April-delivery HRC.

Buyers’ estimations of achievable prices were around a similar level, at €750-770 per tonne ex-works.

Offers were reported at €780-820 per tonne ex-works from integrated mills in the region, mainly for cargoes with lead times in April.

As a result, Fastmarkets calculated its daily steel hot-rolled coil index, domestic, exw Northern Europe at €762.00 per tonne on February 1, up by €1.37 per tonne from €760.63 per tonne on January 31.

The index was also up by €12.42 per tonne week on week and by €66.50 per tonne month on month.
Fastmarkets calculated its corresponding daily steel hot-rolled coil index, domestic, exw Italy at €755.50 per tonne on Thursday, up marginally by €1.75 per tonne compared to €753.75 per tonne on Wednesday.

The index was also up by €14.50 per tonne week on week and by €67.17 per tonne month on month.

In Italy, market conditions were similar to that in Northern Europe. In fact, market sources pointed out that the traditional €15-20 per tonne gap between Italian and Northern European HRC prices was no longer in place, with prices in both regions moving closer together.

In Italy, offers from local suppliers were heard at around €780 per tonne delivered (€765-770 per tonne ex-works) for coil delivered in March-April.

Market participants estimated the tradable market level to be in the range of €750-755 per tonne ex-works.

“Trading has been on pause in Italy for about two weeks now, only sporadic sales here and there. Buyers are trying to push the stock down, so there are really very few sales,” a trading source said.

Import offers were broadly unmoved on Thursday, with Asia-origin coil with March-April shipment offered to Italy at €655-680 per tonne CFR from Asia.

Several sources reported new offers from India coming in closer to €690-700 per tonne CFR, in contrast with offers of €660-665 per tonne CFR heard earlier in January. Indian suppliers were said to be offering material for shipment at the end of March or early April.

Buyers in Europe were cautious with making overseas HRC bookings, with the shipping crisis in the Red Sea and EU safeguard quotas seen as the major risk factors.

Published by: Julia Bolotova