European HRC producers maintain offers despite limited trading

European hot-rolled coil prices moved up slightly on Wednesday September 7 even though trading remained subdued, sources told Fastmarkets.
The number of HRC transactions was limited in both Northern Europe and Italy, but sources said they expect to see a pick-up in activity in the coming weeks.

“Buyers have started to ask for tonnages,” a mill source in Germany said. “If they continue without any restocking in September, they will need to replenish stocks in October, when availability of coil will be limited because of all the production cuts [that have been made].”

The gap between offer prices and bids was still too high, but several trading sources suggested that mills would be able to achieve price rises gradually.

Fastmarkets calculated its daily steel HRC index, domestic, ex-works Northern Europe, at €770.00 ($764.46) per tonne on Wednesday, up by €5.00 per tonne from €765.00 per tonne on Tuesday.

This was also up by €6.67 per tonne compared with €763.33 per tonne on August 31, but down by €55.83 per tonne from €825.83 per tonne on August 7.

Official offers of HRC in the region have been reported at €800-850 per tonne exw, but buyers were looking to pay closer to €750-770 per tonne exw.

Several trading sources said that some mills were ready to accept a price of €780 per tonne exw for HRC on a firm bid.

Fastmarkets’ calculation of its daily steel HRC index, domestic, exw Italy, was €761.67 per tonne on Wednesday, up by €9.17 per tonne from €752.50 per tonne the previous day.

This was up by €21.27 per tonne week on week from €740.00 per tonne, but down month on month by €14.58 per tonne from €776.25 per tonne.

HRC offers from Italian mills were reported at €800-820 per tonne exw and €780-790 per tonne exw for bigger volumes, sources said.

One re-roller reported a sale of a small tonnage of HRC at €800 per tonne exw, but most buyers put the tradeable level for domestic HRC in Italy at no more than €750 per tonne exw.

Despite minimal trading activity, local mills were said to have no intention of reducing their offer prices due to the higher energy costs and production cuts.

Arvedi, one of Italy’s major steelmakers, has been reducing output at its Cremona plant and will be stopping the hot flow of metal for one week in every four. If market fundamentals remain bad, the company will extend the closures to two weeks in every four, sources said.

Market participants said there were two major factors constraining growth in local HRC prices: one was poor apparent steel demand; the other, competitive imports.

Some overseas coil suppliers, however, have started to push for higher prices over the past week. Notably, HRC offers from Asian suppliers, for delivery in the late fourth quarter this year or early in the first quarter of 2023, were reported at €670-680 per tonne cfr Italy. But the long lead times in a highly volatile market were limiting buying interest in Asian material.

After a typhoon struck South Korea earlier this week, major steelmaker Posco was forced to stop production at its unit in Pohang, with market participants estimating that the mill will be out of action for at least two months.

HRC offers from India and Turkey to Italy were reported at higher-than-usual levels of €720-740 per tonne cfr, sources said.

Published by: Julia Bolotova