European HRC prices hit the bottom; mills consider rises on high costs, output cuts

European hot-rolled coil prices reached the bottom of the market during the week to Friday July 15, with producers expected to attempt to raise prices on surging costs, sources told Fastmarkets. Producers in Europe largely believe HRC prices have reached rock bottom and resisted the idea of any further declines, citing high costs and improving demand.

In addition, European mills have been adjusting their output recently to alleviate oversupply in the market.

During the week, ArcelorMittal idled a blast furnace in France with capacity for 1.2 million tonnes per year, while ArcelorMittal Bremen in Germany reduced the output of its flat steel rolling lines this month, but has not stopped any equipment.

In addition, Hebei Iron & Steel Serbia will idle its smaller 900,000-tpy BF before the end of July, with no fixed date for a restart, due to the continued poor demand and falling prices.

Market sources suggested the effects of production cuts will be visible in the European market in the autumn, after the summer break. If end-user demand picks up, the combination of improved activity and reduced supply might give HRC prices a boost in the last quarter of 2022.

The unpredictability of the energy market after Russia temporarily halting gas supply to Germany this week was another concern for participants in the European HRC market.

Last Monday, Russia stopped supply of natural gas to Germany via the Nord Stream 1 pipeline under the Baltic Sea for 10 days for maintenance. But market sources were unsure whether the supply of gas would resume once the maintenance is completed, Fastmarkets heard.

Fastmarkets calculated its daily steel HRC index, domestic, ex-works Northern Europe at €851.67 ($859.04) per tonne on Friday, unchanged from a day earlier.

The latest calculation was up by €11.67 per tonne week on week but down by €74.58 per tonne month on month.

Buyers in the region indicated the tradeable level for HRC was €850-870 per tonne exw.

Sources expect trading in the region to pick up at the end of July on restocking activity.

One integrated mill in the Netherlands may table an offer for HRC at €900 per tonne exw, which is “about €30-50 per tonne up for spot business,” a trading source in the region told Fastmarkets.

Sources expect other major producers to push for higher prices in the coming week.

Northern European mills were still able to offer August-September delivery coil, sources said.

Fastmarkets’ calculation of its daily steel HRC index, domestic, exw Italy was €770.00 per tonne on Friday, stable day on day.

The latest calculation of the Italian index was up by €15 per tonne week on week but down by €89 per tonne month on month.

Buyers estimated the workable price at €740-770 per tonne exw, with one trader reporting a bid at €720 per tonne exw for a large tonnage, but this could not be confirmed by other sources at the time of publication.

Mills in the region were still trying to maintain an official offer level of around €800-820 per tonne exw due to high production costs and seasonal output cuts.

Imports

During the past week, the euro-United States dollar exchange rate reached parity, making imports less attractive.

Import offers for HRC from South Korea, Taiwan and Japan were heard at €730-740 per tonne cfr to Italy in the week. But “the risk of a stronger US dollar doesn’t feed the appetite to buy,” a source told Fastmarkets.

No fresh offers were reported from Turkey due to the country’s Islamic Eid al-Adha holiday, which commenced on July 9.

Published by: Julia Bolotova