European hot-rolled coil prices continued climbing on Tuesday March 3, on an uptick in restocking activity, uncertainty around new imports in relation to existing trade policies and concerns over the escalating conflict in the Middle East, sources told Fastmarkets.
In Germany, several buyer sources reported transactions for HRC with May lead times being done at €700-705 ($821-827) per tonne ex-works, with two managing to “cross the €700 per tonne ex-works line” in recent transactions.
Buyer and seller estimates of achievable prices came in at between €670 per tonne and €700 per tonne ex-works on Tuesday.
Fastmarkets’ daily steel hot-rolled coil index domestic, exw Northern Europe was €694.31 per tonne on Tuesday, up by €1.81 per tonne from €692.50 on Monday March 2.
The index was up by €12.43 per tonne week on week and by €43.24 per tonne month on month.
“Buyers come back for tonnages, even if they have stock – there are concerns that delaying purchases [of HRC] will cost you more,” a buyer source said.
Another transaction was reported by steel-service center at around €680 per tonne ex-works, for a major tonnage of May delivery coil.
Sources also said that the escalating crisis in the Middle East – after the attack by the US and Israel on Iran and it’s region-wide response – has already led to sharp energy price spikes in Europe.
“Electricity prices in Europe are directly linked to gas prices, so with gas prices spiking 30-40% [day on day on March 2] and potentially more on major supply outages, we could have a repeat of the 2022 scenario,” a second buyer said.
A third buyer said: “Energy costs create a massive jump in steel production costs, [so], I guess, European mills withdraw their offers and push for higher prices.”
But any energy price spikes will be more “painful” for electricity intensive electric-arc furnace (EAF) producers than for traditional blast furnace and basic oxygen furnace (BF-BOF) mills. And flat steel products in Europe are predominantly produced via the BF-BOF route.
Electricity accounts for less than 4% of BF-BOF costs, while for EAF mills, electricity can be around 20% of the total, according to sources.
Offers from integrated HRC producers in the region were earlier heard at €700-720 per tonne delivered (around €680-705 per tonne ex-works), with limited room for discounts and most sellers claimed to be largely sold out of April-delivery coil.
And because these higher levels have gradually been achieved in recent transactions, sources said a new round of prices increase announcements was highly likely.
But, at the same time, market participants noted that end-user demand for steel remains weak.
“The recent price rally reminds me of 2022, when we had sharp [flat steel] price spikes on panic buying, followed by sharp and painful prices declines,” a fourth source told Fastmarkets.
“We don’t see any signs of improving demand from end users in the mid-term, so my concern is that the current uptrend is a bubble,” the source added.
In the secondary market in the week commencing February 23, some steel service centers were still selling 4 mm HR sheet aggressively at around €730-740 per tonne CPT, using old HRC feedstock for production that was purchased at lower prices. New offers, however, were heard at prices closer to €800 per tonne CPT, to reflect the higher feedstock costs, Fastmarkets understands.
In Southern Europe, meanwhile, Fastmarkets’ corresponding daily steel hot-rolled coil index, domestic, exw Italy, was calculated at €680.00 per tonne on Tuesday, up by €3.75 from €676.25 per tonne on Monday.
The index was up by €13.75 per tonne week on week and by €33.00 per tonne month on month.
In Italy, offers of May-delivery HRC were reported at around €700 per tonne ex-works from integrated suppliers and re-rollers.
But sources said that some local suppliers still had April-delivery coil available and workable prices continued to be reported at €675-685 per tonne ex-works, while there was one transaction at €680 per tonne ex-works, according to sources.
In terms of imports, however, new offers were scarce, sources said – mainly due to new safeguard regime concerns.
Most second-quarter shipment volumes from Turkey, Saudi Arabia and North Africa have reportedly already been secured by traders, who are now seeking to resell the material to mid-sized buyers at €640-650 per tonne DDP or higher, including Carbon Border Adjustment Mechanism (CBAM) costs.
At the same time, several trading sources said that DDP, CBAM-accounted offers were getting more scarce due to uncertainty over country-specific quotas and CBAM costs.
One Turkish seller sold a 50,000-tonne cargo of HRC to Spain and Italy at $590 per tonne FOB, sources said, which roughly corresponds to €545 per tonne CFR, including the anti-dumping duty. The lead time was reported as June.
HRC offers to Anwerp from Turkey were heard at €550-555 per tonne CFR, sources said, for end-June delivery.
In comparison, in early February Turkey concluded a deal for a sizable quanity of HRC to Europe at around €515–520 per tonne CFR.
Market participants also reported new offers from India at around €520-525 per tonne CFR to the Mediterranean.
