European HRC producers bullish for Q1; buyers expect no major changes before year-end

European hot-rolled coil producers are continuing to book December tonnages at reduced prices, but are refusing to give discounts for the first quarter of 2023, given that progress has been made with long-term contract negotiations, sources told Fastmarkets on Monday November 28.
Fastmarkets calculated its daily steel HRC index domestic exw Northern Europe at €618.75 ($642.88) per tonne on Monday, down by €5.94 from €624.69 per tonne on Friday.

The latest calculation of the index is down by €6.04 per tonne week on week and by €41 per tonne month on month.

Tradeable values of HRC from integrated producers in the region were between €600 per tonne EXW and €620 per tonne EXW, buyer sources said.

A transaction was also heard for Italy-origin coil delivered to Germany at €590 per tonne, a distributor source said.

Only December tonnages were available at discounted prices, mill sources said, and for first-quarter volumes the minimum price idea was €650 per tonne EXW.

Producers expect demand from the automotive sector to start recovering next year.

“It won’t be booming, of course, but we do expect a recovery from the low levels seen in 2022,” a mill source in the region said.

Long-term agreements have been reached with automotive industry end consumers, but at higher prices than initially targeted, several sources said.

“Buyers saw the [long-term HRC] price as no higher than €700 per tonne EXW in October. Now the agreements have been settled at €800-850 per tonne EXW,” a stockholder said. “This is lower compared with 2022 levels, but higher than expected, so it is a positive sign for the market.”

Market participants said they expect production cuts to support HRC prices in the first quarter of 2023.

Fastmarkets’ calculation of its daily steel HRC index, domestic, exw Italy was €596.25 per tonne on Monday, up by €5 per tonne from €591.25 per tonne on Friday.

The latest calculation of the Italian index was down by €3.75 per tonne week on week and by €80.75 per tonne month on month.

Buyer estimates of achievable prices were about €590-600 per tonne EXW.

But Italian producers were trying to push for higher prices for January-February 2023, to about €630-640 per tonne EXW, up from recent transactions for December volumes at €580-600 per tonne EXW.

Buyers were skeptical about such a large price rise for the time being. Some trading sources, however, suggested that steel service centers and distributors will have to make bookings for February delivery to secure HRC availability in stock, which might help mills achieve some upticks in prices.

Overseas suppliers have reportedly been targeting higher prices as well.

Notably, new target levels were no lower than €600 per tonne CFR Italy from Japan, South Korea, Indonesia and India.

Buyers’ price ideas were no higher than €580 per tonne CFR Italy, several sources said.

Published by: Julia Bolotova