European HRC prices lack clear direction despite positive producer sentiment

European hot-rolled coil prices lacked any clear direction on Tuesday July 9, despite widespread positive sentiment among flat steel producers, sources told Fastmarkets.

Many European mills have started aiming for higher HRC spot prices, trying to take advantage of the limited availability of cheap imports due to the implementation of new EU safeguard measures on July 1, Fastmarkets understands.

In the HRC market, the major change was the addition of a 15% per-country cap in relation to access to residual HRC quotas, which is expected to lead to a reduction in import volumes under the “other countries” category of around 1.0-1.5 million tonnes.

Vietnam, Japan, Taiwan, and Egypt have previously been the principal suppliers of HRC to the EU under the “other countries” category, with the Asian suppliers offering the most competitive prices.

“It is almost impossible now to get an offer from Vietnam, Taiwan or Japan,” a buyer source told Fastmarkets.

Mills in Northern Europe therefore started to add €10-20 ($11-22) per tonne for July/August delivery HRC, with offer prices reaching €640-650 per tonne ex-works.

“The mills in Northern Europe are in a slightly better position now, with order books a little bit fuller,” a second buyer source told Fastmarkets, adding that customers who previously bought from “third countries” were now getting higher offer prices than regular customers.

It is yet to be seen if buyers will accept the higher offers, sources said.

Market participants estimated the workable level for HRC in Northern Europe at €620-640 per tonne ex-works on Tuesday.

Fastmarkets calculated its daily steel hot-rolled coil index domestic, exw Northern Europe at €633.13 on Tuesday, down by €0.62 per tonne from €633.75 per tonne on Monday.

The index was up by €4.38 per tonne week on week but down by €0.62 per tonne month on month.

Some market participants told Fastmarkets they expect to see even higher offer levels for September-delivery material.

One seller source told Fastmarkets that, given that prospect, many customers might decide to accept the current higher offers – although they also reported that buying activity was currently limited, with most customers in “wait-and-see” mode.

But the first buyer source told Fastmarkets that the economic situation in Europe had yet to improve and said demand for flat steel products “remains soft.”

In Southern Europe, Fastmarkets calculated its daily steel hot-rolled coil index domestic, exw Italy at €628.33 per tonne on Tuesday, up by €2.08 per tonne from €626.25 per tonne on Monday.

The index was up by €8.33 per tonne week on week, but down by €4.58 per tonne month on month.

In Italy, sources said that HRC was on offer at €640-650 per tonne delivered, which nets back to €630-640 per tonne ex-works.

However, trading remained quiet.

Market participants estimated the workable market level at about €620-640 per tonne ex-works.

Published by: Darina Kahramanova

fastmarkets.com