European HRC producers have no intention of lowering prices despite quiet trading

Steel mills in Europe are still hoping to achieve higher prices for second-quarter-rolling hot-rolled coil, despite buyers making no purchases at all on Tuesday February 14, Fastmarkets understands.
On Monday, leading European steelmaker ArcelorMittal raised its offer prices for May-delivery HRC by €20 per tonne, to €820 ($877) per tonne delivered, but the market participants put the workable price at between €750 and €770 ($802-823) per tonne ex-works.

“Mills have good order books, they are not hungry for orders and there is no pressure from their side,” a trading source in Germany said. “And we see stock levels at steel service centers are getting lower and there are gaps in some dimensions and grades [of HRC].”

Producers in Northern Europe have mostly sold out of April-delivery coil, sources told Fastmarkets.

“The lead time [for HRC] is about seven or eight weeks now,” a second trader in Germany said.

Market participants said they expect European buyers to come back to the market to restock with May-delivery volumes in about two weeks’ time.

“There is a chance that higher offers will be accepted in deals, even though the demand from the automotive and construction sectors is not booming,” a distributor in the Benelux area said. “But mills are in a better position than buyers right now and, of course, there are practically no competitive import offers.”

Fastmarkets calculated its daily steel HRC index, domestic, exw Northern Europe at €765.63 ($818.57) per tonne on Tuesday, down by €2.15 per tonne from €767.78 per tonne on Monday.

But the latest calculation of the index was up by €10.63 per tonne week on week and by €54.92 per tonne month on month.

Fastmarkets’ calculation of its corresponding daily steel HRC index, domestic, exw Italy, was €756.25 per tonne on Tuesday, down by €0.42 per tonne from €756.67 per tonne on Monday.

The latest calculation of the index was, however, up by €6.67 per tonne week on week and by €59.62 per tonne month on month.

Offers of April-May delivery coil from integrated mills were heard at €780-800 per tonne delivered – equivalent to €760-780 per tonne ex-works.

But market participants said that one integrated producer in the south of Italy was overbooked and was, therefore, delaying orders.

Buyer estimates of achievable prices were heard at €770-780 per tonne delivered (€750-760 per tonne ex-works).

Import offers were rare in the market on Tuesday, however, although one trading source in Italy reported an offer from an Indian supplier at €720 per tonne CFR to Italy, albeit for a limited tonnage.

April-shipment HRC from South Korea was on offer to Italy at $810 per tonne CFR.

And an offer of April-shipment HRC from a Japanese mill was heard at €775 per tonne CFR, but this was not considered workable by buyers.

Buyers indicated their idea of a workable price for imports in Southern Europe was no higher than €740-750 per tonne CFR.

Turkish suppliers, who can usually offer short lead times compared with the Asian mills, remained out of the market because of the disruption caused by last week’s earthquakes.

Published by: Julia Bolotova