European HRC producers aim for higher prices

The trading lull continued in the European hot-rolled coil market on Friday April 26, but sentiment turned cautiously positive after some suppliers pushed their offer prices higher, sources told Fastmarkets.

A leading European steelmakers reportedly withdrew from the market at the end of the week to review their offer prices, Fastmarkets understands. But sources said they expect the mill to return with higher prices on Monday, with offers likely to be up by around €30 ($32) per tonne for June-delivery HRC.

“New offers [for HRC] will be set around €660-680 per tonne ex-works.,” a buyer in Europe told Fastmarkets. “We’ll then see if the market accepts [them], but there has been pressure [for higher prices] from the mills for about two weeks now – partially based on Asian prices rising.”

Other steelmakers are expected to follow suit, sources said.

Earlier this week, offers were reported at €630-640 per tonne ex-works from integrated mills in Northern Europe, while buyers estimated tradable prices at €620-630 per tonne ex-works.

Most market participants agreed that flat steel prices in Europe are likely to have hit rock bottom already, despite sluggish end-user demand, so mills are expected to push for higher prices.

“Trading is still weak, and volumes are not there yet, but the steel mills need better margins,” a source in the Benelux area said.

“I think there is room for some [HRC] price increases, but not a big one,” a buyer in Northern Europe said.

Fastmarkets calculated its daily steel hot-rolled coil index domestic, exw Northern Europe at €630.42 ($675.63) per tonne on Friday, up by €5.04 per tonne from €625.38 on Thursday April 25.

The index was up by €4.92 per tonne week on week but down by €37.08 per tonne month on month.

In Southern Europe, Fastmarkets’ daily steel hot-rolled coil index domestic, exw Italy was calculated at €620.63 per tonne on Friday, unchanged day on day.

The index was up by €0.63 per tonne week on week, but down by €31.04 per tonne month on month.

The domestic market in Italy was largely inactive on Friday due to a public holiday in the country.

Earlier this week, however, a domestic supplier increased its offer prices for HRC, but it was unclear whether buyers were willing to accept the higher offers, which came in at €660-670 per tonne delivered (equivalent to €650-660 per tonne ex-works), compared with €640-650 per tonne delivered (€630-640 per tonne ex-works) in early April.

This was also in stark contrast to the most recent transactions, which were heard at €620-630 per tonne ex-works.

Some sources pointed out that rising HRC import prices and restocking in mid-April were likely to have supported the bullish attempts by the steel mills.

But others were more cautious and said that a strong price rebound was unlikely in the near term because there was no support from real steel demand.

“In May, we will either see stabilization or a €10-15 per tonne rebound in a best-case scenario,” a source in Italy said. “The core problem is demand.”

In the week to Friday, offer prices for Asia-origin HRC for June shipment were reported at around €590-610 per tonne CFR, with the lower end only offered by Vietnamese mills.

Published by: Julia Bolotova