European HRC buyers question price floor

European hot-rolled coil buyers were testing the market with inquiries and questioning the price floor, Fastmarkets heard on Tuesday November 15.
Fastmarkets calculated its daily steel HRC index, domestic, ex-works Northern Europe, at €630.00 ($650.31) per tonne on November 15, down by €11.25 per tonne from €641.25 per tonne on November 14.

The latest calculation of the index was down by €20.00 per tonne week on week and down by €70.00 per tonne month on month.

Producer sources reported indications of achievable prices at €640-650 per tonne EXW for December rolling coil.

At the same time, several distributors reported sales in the region at €620-630 per tonne EXW.

Also, transactions for small tonnages of Italy-origin HRC were heard at €650-670 per tonne delivered to Germany.

Producer sources said that they heard an increased number of inquiries from buyers this week for HRC with January delivery dates.

“Buyers are testing the market. Normally, they would have been restocking for [first-quarter] volumes now, but there is lack of clarity on whether the [HRC] prices have touched the floor,” a mill source told Fastmarkets.

A distributor in the region said that the levels of HRC inventory at some buyers were starting to reduce.

But two big steel service centers reported having sufficient levels of inventory.

Most mills in Northern Europe still have December-rolling HRC to sell. Offers for January production have yet to be announced, but several mills said that they would target at least €700 per tonne EXW.

In general, sources were not ruling out further downward price corrections for fourth-quarter-production HRC, because order books at producers were thin.

Fastmarkets’ calculation of its daily steel HRC index, domestic, exw Italy, was €620.63 per tonne on November 15, up by €0.63 per tonne from €620 per tonne the previous day.

The latest calculation of the Italian index was down by €40.75 per tonne week on week and down by €79.37 per tonne month on month.

Trading was also slow in Italy’s market, sources said.

Offers from local mills were reported at €630-650 per tonne delivered, which would net back to €610-630 per tonne EXW, sources said. The lower end, however, was not widely confirmed by mill sources.

Alternatively, several buyers reported a transaction at €620 per tonne delivered (€600 per tonne EXW).

Import HRC offers from Japan and South Korea were heard at €570-590 per tonne cfr. Southeast Asian suppliers could offer material for January shipment.

Despite the attractive price, the demand for import coil was limited by safeguard risks and long lead times.

“European buyers largely prefer to secure [HRC] tonnages at home,” a distributor source said, “considering the unpredictability of the market.”

The complimentary Fastmarkets webinar “European Flat Steel in 2022” will take place at 10am UK time on November 22.