European HRC outlook bearish as market digests import developments

Developments in the import market caused concern for European hot-rolled coil market participants Nov. 21, as they expressing wariness of further price declines.

Platts assessed hot-rolled coil in Northwest Europe down Eur10 on the day at Eur615/mt ex-works Ruhr.

Tradable value indications were largely cited between Eur600-Eur625/mt ex-works Ruhr and Northern Europe, although some perceived opportunity to settle deals as low as Eur575/mt ex-works with North European mills.

Overall, however, transactional activity remained thin, with most distributors focusing on hand-to-hand deals between mills and end-users, restocking specific dimensions, or refraining from buying entirely due to expectations of further downtrend.

“Our customers aren’t willing to pay higher prices, and everyone is expecting further reduction which is slowing the market down,” a service center source said. “Mills are really under pressure but there seems to be a psychological barrier to prices below Eur600/mt – if this breaks, I think we’ll see a Eur550/mt soon after.”

Indeed, buyers – often holding their own volumes of expensive stock – reported concern on the day that prices could be additionally pressured by new duty-free Indian import offers. While third country offers to Europe were signaled to increase during week ended Nov 18, speculated as relating to potential new European duties on Far East-origin imports, sentiment was that any uptrend in the import market would be undermined by the re-entry of competitive Indian exports.

However, an Italy-based trader said Japanese and South Korean producers were wary of “pushing too much,” rejecting high volume bids so not to “highlight their material.”

Despite allegations of over-competitiveness, the trader said imports would have to move to Eur500-520/mt CIF to compete with declining domestic prices. Platts assessed import prices stable at Eur580/mt ex-works Italy Nov. 21.

One Italy-based producer was taking what volumes were advertised, settling deals below other producers at Eur600/mt delivered, or the equivalent of Eur580/mt ex-works Italy.

Import HRC into South Europe was assessed at parity with the domestic market at Eur580/mt CIF.

Platts is part of S&P Global Commodity Insights.

— Benjamin Steven