European HRC producers cut prices for December, but targeting price hikes for Q1 volumes

European hot-rolled coil producers are selling December volumes at reduced levels, but are targeting price increases for the first quarter of 2023, sources told Fastmarkets on Friday November 25.Fastmarkets calculated its daily steel HRC index, domestic, ex-works Northern Europe at €624.69 ($650.65) per tonne on Friday, up by €8.02 from €616.67 per tonne on Thursday.

The latest calculation of the index is down €1.14 per tonne week on week and by €45.31 per tonne month on month.

Transactions for December volumes were heard at €610-620 per tonne EXW in Germany and in the Benelux region.

But several mill sources told Fastmarkets that the current minimum price idea for January is closer to €650 per tonne EXW.

“If we keep selling at prices below €650 [per tonne EXW], we will have to shut down capacity altogether,” a mill source said.

At the same time, producers expect demand from the automotive sector to start recovering next year.

Several sources said that agreements had been reached with end consumers with prices down by about €150 per tonne compared with November 2021. 

“In fact, deals with automotive [market participants] are being signed at about €150-per-tonne lower than last year,” a trading source in Germany said. “But spot prices [for HRC] have dropped by much more than [€150 per tonne year on year], so mills are refusing to give [any more] discounts to the spot market.” 

Market participants said they expect production cuts to have a positive effect on HRC prices in the first quarter of 2023.

Fastmarkets’ calculation of its daily steel HRC index, domestic, exw Italy, meanwhile, was €591.25 per tonne on Friday, up by €4.58 per tonne from €586.67 per tonne on Thursday.

The latest calculation of the Italian index is down by €8.75 per tonne week on week and by €103.75 per tonne month on month.

Buyer estimates of achievable prices were about €580-600 per tonne EXW.

But mill sources said that prices below €600 per tonne EXW were only available from one producer for December volumes and the target price for the first quarter of 2023 will be around €600-650 per tonne EXW, depending on the mill.

Overseas coil markets were generally quiet in the week to Friday, but several trading sources in Europe reported that a deal for Vietnamese HRC with late first-quarter delivery had been done at $550 per tonne CFR to Italy – although the deal could not be widely confirmed by the time of publication.

Published by: Julia Bolotova