European HRC price remains stable; price downtrend forecast amid depressed demand

Trading activity in the European steel hot-rolled coil market remained depressed on Thursday August 25 with participants forecasting a further downtrend in the market.
Sluggish demand could persist or even worsen heading into the fourth quarter, market sources said, due to overstocking and reduced end-user consumption. Customers were forecasting further price drops, and a wait-and-see attitude persisted.

Fastmarkets calculated its daily steel HRC index, domestic, ex-works Northern Europe, at €720.00 ($716.52) per tonne on Thursday, unchanged from the previous day.

The latest calculation of the index is down by €31.67 per tonne week on week and down by €137.00 per tonne month on month.

A transaction for HRC in Northern Europe was heard at €710 per tonne exw for a small tonnage.

Most buyers estimated the workable price for HRC in the region to be €710-750 per tonne exw.

Mills, despite attempting to raise prices because of increased energy costs, faced sluggish demand due to persistent overstocking among buyers, Fastmarkets heard.

While many areas in Northern Europe have returned to work after summer maintenance closures, market activity remained quiet. A buyer told Fastmarkets that many customers were waiting for prices to drop further.

“The market is difficult at the moment because everyone is trying to prolong their summer vacations, so they don’t have to make decisions,” A second market source told Fastmarkets. “Big industries sign annual or six-month contracts, so the important consideration for them is delivery times.”

The same source noted how mills cannot target high prices, despite their best attempts to do so, because of rising input costs such as energy. Instead, the direction of the price has always been, and will continue to be, dictated by the forces of supply and demand.

A fall in actual demand may well result in a fall in prices, regardless of fundamentals.

A third market source told Fastmarkets if these conditions were to continue, mills could have to cut down significantly on production.

Fastmarkets’ calculation of its daily steel HRC index, domestic, exw Italy, was €705.00 per tonne on Thursday, also unchanged from the previous day.

The latest calculation of the Italian index is down by €35 per tonne week on week and down by €75 per tonne month on month.

The calculation was based on buyers’ estimates of achievable prices reported at €700-710 per tonne exw.

As a result of summer maintenance closures, there was minimal trading activity, Fastmarkets heard.

Demand remained sluggish due to overstocking and a wait-and-see attitude among buyers. Customers have delayed restocking until September to gain greater clarity around future consumption levels, sources told Fastmarkets.

Demand for overseas coil remained sluggish in the week to Thursday.

Buyers in Northern Europe estimated the tradeable price for overseas coil at €650-670 per tonne cfr.

Long delivery times continued to be a factor driving the low levels of transactions in the import market, Fastmarkets heard. With some customers forecasting depressed end-user consumption, they were reluctant to submit orders for stock which could take many months to arrive, by which time it could be over-priced, or there may be no demand for it.

Published by: India-Inés Levy