European HRC market quiet as buyers await clarity with Q2 import volumes

Slow trading conditions persisted in the European hot-rolled coil market on Friday March 22, with buyers keeping a low profile and waiting for the next quarterly EU quota period to estimate inflows in the second quarter, sources told Fastmarkets.
Buyers also remained unconvinced that HRC prices have hit rock bottom in Europe and were counting on further decreases, sources said.

Sluggish demand and the recent downtrend in iron ore and coking coal prices have been fueling bearish expectations, Fastmarkets understands.

But European mills were reluctant to cut prices further, Fastmarkets heard.

“Mills expected [HRC import] quotas to be exceeded for key suppliers from Asia and India and [presumed that] safeguard duties will be applied, making imports less competitive. Therefore, those who need [HRC] with shorter lead times will have no other choice but to book with EU mills,” a buyer in Germany said.

Current offers from integrated mills in Northern Europe were still around €700 ($763) per tonne ex-works, with €680-690 per tonne ex-works achievable on a firm bid, sources said.

Buyers’ estimations of workable prices were reported in the range of €660-690 per tonne ex-works, but transactions were rare.

“European mills officially offer €700 [per tonne ex-works], but this price can be negotiated. Mills are looking for orders, so €670-680 can be reached,” a buyer in the Benelux region said.

“Demand [from end users] is poor and weaker than expected, so stock-holders and steel service centers are confronted with stocks [that are too high] relative to demand,” the buyer added.

As a result, Fastmarkets calculated its daily steel hot-rolled coil index domestic, exw Northern Europe at €680.38 ($741.43) per tonne on Friday, down by €0.25 per tonne day on day from €680.63 per tonne.

The index was down by €12.12 per tonne week on week and by €42.75 per tonne month on month.

In Southern Europe, Fastmarkets’ corresponding daily steel hot-rolled coil index domestic, exw Italy was calculated at €662.50 per tonne on Friday, down by €1.00 per tonne day on day from €663.75 per tonne.

The index was down by €9.17 per tonne week on week and by €58.13 per tonne month on month.

Official HRC offers from the sole Italian supplier for May-delivery material were heard at €680-690 per tonne delivered, which nets back to about €670-680 per tonne ex-works.

But buyers’ ideas of workable prices were no higher than €660-670 per tonne delivered (equivalent to €650-660 per tonne ex-works).

The Italian market was also quiet. Sources expected some limited restocking after the Easter holiday in early April, when it should become clear how many imported tonnes will enter the EU market in the second quarter.

“Looks like the Indian [HRC] quota and the ‘other countries’ quota will be exceeded for [the second quarter]. We need to see what duty rates will be applied on this material and consequently see the realistic [price] gap between domestic and import HRC,” a steel service center source in Italy said.

HRC offers from Asian suppliers for June-July arrival were reported at €570-600 per tonne CFR; the lowest offers came from Vietnamese suppliers.

An offer from Saudi Arabia was heard at €570 per tonne CFR for May shipment.

Offers from Turkey for June-arrival coil were heard at €620 per tonne CFR, including the anti-dumping duty.

Meanwhile, overall bids for import coil were heard no higher than €550 per tonne CFR.

Published by: Julia Bolotova