European HRC prices move up but demand remains weak

European hot-rolled coil markets in both southern and northern Europe saw some positive price gains June 17, but visibility remains unclear, sources told S&P Global Platts.

An Italian rolling mill source said the market continued to stabilize with limited opportunity for lower prices going forward.

“We are feeling that there is no possibility for lower prices from here, there should be an increase in prices as all mills are in the worst position now – we recalculated the profitability budget and its now in a tragic position.”

The daily Platts TSI index for HRC southern Europe increased Eur1.50/mt to Eur392.50/mt EXW S.Eu, while the daily Platts TSI index for northern Europe went up Eur1.50/mt to Eur398/mt EXW Ruhr.

Most buyers across the European coils market continue to only buy what they need with most deals heard around 100-500 mt over the last weeks.

The continued uncertainty puts buyers off committing to either import material or larger volumes.

“We buy small quantities as we also sell small quantities, it’s not the normal levels we are used to,” said a Benelux steel service center source.

“We try to keep purchasing at the minimum if possible,” said the Benelux source, adding that they were trying to sell from their stocks as much as possible. “The only thing I can confirm is that demand is not picking up.”

A German service center source said liquidity pressure was increasing at stockholders and service centers.

“Stockholders are under pressure to sell material. They do have lower stocks now than in the months after the 2009 financial crisis but they are still pushing material into the market due to liquidity needs,” he said.

According to the source it was possible to buy from stockholders de-coiled sheets cut to length at or below current mill offers for new production coils, highlighting the distressed position that some businesses were now in.

“There is a two-tier market almost now, those that will make immediate payment and take delivery as agreed, versus those that will agree [on] price then ask extended payment terms and also try to delay taking delivery – even some will come back and try to renegotiate the agreed price lower afterwards – desperate measures,” the German source said.

With Europe’s demand muted, western European mills continued to search for business outside Europe to fill their order books.

Following recent bookings to China from a European mill, the trader said that volumes, albeit small, have been bought by Canadian buyers for HRC, according to a German trader.

— Len Griffin, Laura Varriale