European HRC market enters quiet period, slow demand weighs on post-summer expectations

The European hot-rolled coil market continued to slow down ahead of the seasonal summer holiday period, with weak demand depressing buyer expectations for autumn, sources told Fastmarkets on Tuesday July 18.
Sources said that apparent demand has recently been falling behind real demand for steel in Europe and hampering attempts by steel mills to push for higher prices earlier this month.

End-user demand from the automotive industry, the key consumer of flat steel, was described as “stable at low levels,” sources said, while apparent steel demand from the car makers has been persistently weak.

Distributors and steel service centers have preferred to keep their stocks at medium to low levels and have mostly been engaging in back-to-back purchases.

“Buyers remain largely inactive, even though levels of stock are running [down],” a mill source said.

Offer prices for September-October delivery of HRC in northern Europe were reported at €680-700 ($764-786) per tonne ex-works.

But one producer in Germany was reported to have no more spot market allocations for October delivery, sources said.

A re-roller in the region has some tonnages for September delivery at €650-660 per tonne ex-works, Fastmarkets understands, and a mill in Italy was offering September-delivery HRC to Germany at €700-720 per tonne delivered.

Most sources estimated the tradable value for HRC as no higher than €660-670 per tonne ex-works, pointing out that mills were ready to offer discounts for bigger tonnages.

Fastmarkets’ daily steel hot-rolled coil index, domestic, exw Northern Europe, was calculated at €670.83 ($753.49) per tonne on July 18, up by just €0.83 per tonne from €670.00 per tonne on Monday.

The latest calculation of the Northern European index was down by €10.00 per tonne week on week and by €18.96 per tonne month on month.

Fastmarkets calculated its corresponding daily steel hot-rolled coil index, domestic, exw Italy, at €648.75 per tonne on Tuesday, down by €7.50 per tonne from €656.25 per tonne on July 17.

The Italian index was down by €12.50 per tonne week on week and by €12.08 per tonne month on month.

Even though Italian mills attempted to raise their prices to around €700 per tonne ex-works in early July, that level was not agreed in any deals, sources said.

But transactions for September-delivery HRC in the country were heard at €640-650 per tonne delivered, which would net back to €625-635 per tonne ex-works, they added.

One trading source estimated the tradable value for small tonnages at €640-650 per tonne ex-works.

And some bids for larger tonnages were heard at as low as €610-620 per tonne ex-works, although no sales were reported at that price.

Distributor sources, meanwhile, said they were hoping to negotiate October-delivery HRC at €670-680 per tonne delivered, which would net back to €655-665 per tonne ex-works.

There have been few import offers recently, because both buyers and suppliers were worried about the speed at which the “other countries” quota for imports into the EU was being filled for third-quarter allocations.

As of July 17, 66.11% of the total third-quarter allocation of 933,743 tonnes for “other countries” had been taken up, according to EU customs statistics. The remaining 316,409 tonnes will be available until September 30, but sources said that more than 100,000 tonnes of that amount had already been allocated.

Some HRC for shipment in September-October from Asia was said to be available at €590-610 per tonne CFR, mainly from Vietnam and one mill in South Korea.

Published by: Julia Bolotova