European HRC buyers’ moods turn bearish on weak demand

Bearish sentiment prevailed in the European hot-rolled coil on July 12 due to limited demand from both end users and distributors.

Against earlier expectations after the domestic price stabilization, neither buyers’ interest nor prices have recovered. The buyers preferred to remain in a “wait-and-see” mode, reluctant to buy big volumes, as they believed that the bearish price correction was possible.

“The price increase is not there, there are no fundamentals for the recovery — production costs are still low,” a Southern Europe-based service center source said. “In terms of demand — it remains weak globally, not only in the EU. Nobody wants to book volumes.”

A distributor said buyers’ moods turned pessimistic, as they wanted to see HRC prices below Eur600/mt ex-works before restocking.

“But previously they were telling the same about prices of Eur650/mt ex-works,” the distributor added.

Platts assessed domestic hot-rolled coil prices in Northwest Europe down Eur10 on the day at Eur670/mt ex-works Ruhr on July 12.

Tradable values were heard at Eur650-Eur690/mt ex-works Ruhr, and the majority of sources reported achievable prices within the range of Eur660-Eur670/mt ex-works Ruhr.

Market sources said that some of the region’s mills have been ready to sell bigger lots of coil at Eur650/mt ex-works Northwest Europe. In addition, some mills were reported to have August rolling coil, indicating empty orderbooks.

Some mills, particularly in Southern Europe have pushed offers up, but it did not result in an increase in transaction prices, sources said.

Platts assessed domestic prices for hot-rolled coil in South Europe at Eur655/mt ex-works Italy on July 12, down Eur5 on the day. The assessment was based on tradable values reported at the equivalent of Eur650-Eur660/mt ex-works Italy, while official offers were heard at Eur670-Eur700/mt ex-works Italy.

Some market participants, however, believed that the distributors would have to restock soon and that the trading activity recovery would help drive domestic prices up. EU coil prices were additionally supported by seasonal maintenances at steel mills and long lead times for imported coil.

“Customers do not have much stocks so they would return when they would be more sure in the prices,” a trader said. “Currently there is a standoff between buyers and sellers.”

An Italy-based service center source expected some limited strengthening on apparent demand from restocking.

Platts is part of S&P Global Commodity Insights.

Author Maria Tanatar