European HRC buyers question future price direction

European hot-rolled coil prices were broadly flat on Wednesday April 12, with weak end-user demand dampening sentiment despite anticipated supply tightness, while buyers in Italy showed more interest in imports.
Thin trading in HRC markets across Europe is keeping prices largely unchanged, sources said.

“There are no [HRC] offers and no demand. The market is totally quiet,” one distributor in Northern Europe said.

Market sources noted that sentiment for the second and third quarters of the year had soured due to a lack of demand.

Most sources now believe the target price for July-delivery HRC of €900 ($981) per tonne EXW, as voiced by some mills before Easter holidays, is unlikely to be achieved despite expected supply issues.

Firm offers were scarce in the market on Wednesday. German mills were said to be offering July-August delivery HRC, while ArcelorMittal is reportedly still out of the market, assessing the impact of fires in Spain and France.

Most buyers in Northern Europe indicated a tradable price for HRC in the region at €830-860 per tonne ex-works.

“There is growing uncertainty about the price direction in the coming months. Producers are trying to maintain offers at high levels, claiming they are fully booked or have limited allocations available,” a second distributor told Fastmarkets.

“The production stops at ArcelorMittal in Spain and France could help the situation, but demand remains a major problem,” the second distributor added.

Steel service centers (SSCs) and distributors have sufficient stocks so restocking is unlikely in the near term.

Sources expect competition between distributors and SSCs in the secondary market to become fierce in the coming weeks due to the expected downtrend in the commodity-grade market and disappointing end-user demand.

“Distributors might be afraid that [HRC] prices will drop shortly and therefore want to reduce the level of stock to avoid stock depreciation,” a third source said.

Fastmarkets calculated its daily steel hot-rolled coil index, domestic, exw Northern Europe at €855.00 per tonne on Wednesday, stable day on day.

The index was down €4.38 per tonne week on week, but up by €24.17 per tonne month on month.

Fastmarkets calculated its corresponding daily steel hot-rolled coil index, domestic, exw Italy at €850.00 per tonne on Wednesday, down by €3.13 per tonne from €853.13 per tonne on Tuesday.

The index was down by €1.88 per tonne week on week, but up by €39.34 per tonne month on month.

Sources reported offers for July-delivery HRC from integrated mills in the nation at €870-880 per tonne delivered, which would be equivalent to €850-860 per tonne ex-works.

Levels of €840 per tonne ex-works were achievable for bigger tonnages, according to sources.

Some sources even reported bids at €820-830 per tonne ex-works from tubemakers, but producers were reluctant to accept these levels.

Re-rollers offered June-July-delivery HRC at €850-860 per tonne ex-works.

Meanwhile, import prices have softened recently, attracting more interest from Italian buyers.

Indian HRC with June shipment was offered at $780-790 (€715-725 per tonne CFR) per tonne CFR, compared with €750-760 per tonne CFR the previous week.

One source reported an offer of India-origin coil at $750 per tonne CFR available for significant allocations, but this was not widely confirmed by other market sources. Other sources said it was likely a bid.

A Japanese producer offered June-shipment coil to Italy at $820 per tonne CFR.

No fresh deals were reported so far on Wednesday, but sources said that negotiations for Indian HRC were under way.

Published by: Julia Bolotova