European HRC producers mull higher prices after summer holidays, buyers skeptical due to lackluster demand

Quiet conditions prevailed in the European steel hot-rolled coil markets on Wednesday August 16, with only a few suppliers seen to be active in Northern Europe, while Italian mills were largely out of the market because of summer stoppages, Fastmarkets heard.

Trading was slow across Europe, which was typical for August.

Some suppliers in Northern Europe were still active, however, offering September-rolling HRC at quite aggressive prices, which indicated gaps in their order books, market sources suggested.

Notably, one integrated mill in the region was heard selling HRC at €630-650 ($688-710) per tonne ex-works.

Other integrated producers were largely inactive for various reasons, including scheduled summer maintenance work or technical issues.

For example, Salzgitter, one of the leading producers in the region, planned to idle its blast furnace (BF) A, with capacity for 2 million tonnes per year, for relining during the week started August 14.

The effect of this on the market, however, was expected to be limited because production lost from the planned relining of BF A would be compensated through the stockpiling of slab delivered from other companies in the group, as well as by restarting the 800,000-tpy BF C, idle since 2019.

Buyers estimated tradeable prices for HRC in Northern Europe to be no higher than €630-640 per tonne ex-works.

Fastmarkets calculated the daily steel hot-rolled coil index, domestic, exw Northern Europe, at €637.08 ($695.51) per tonne on Wednesday, down by €7.50 per tonne from €644.58 the previous day.

The Northern Europe index was also down by €7.50 per tonne week on week and down by €35.17 per tonne month on month.

Market sources said that, starting from September, producers would be back in the market with higher offers, expecting apparent steel demand to support a rebound in HRC prices.

“Already [this week], some stockholders and distributors claim that their levels of inventory are below normal,” a trading source in the region said.

At the same time, the prospects for consumption by end-users were quite dull for the rest of the year, for most key steel-consuming industries, with the exception of the automotive sector. Market sources suggested, therefore, that even if there were a price rebound in September, it might only be short-lived.

Fastmarkets’ calculation of the daily steel hot-rolled coil index, domestic, exw Italy, was €632.50 per tonne on Wednesday, down only by €1.18 per tonne from €633.68 on Tuesday.

The Italy index was also down by €1.18 per tonne week on week, and down by €22.50 per tonne month on month.

The Italian market was similarly quiet, with most local suppliers seen to be out of the market and expected to come back with fresh offers late in August or early in September.

Buyers estimated tradeable values in the country at €620-640 per tonne ex-works.

But several sources told Fastmarkets that Italian mills also planned to push HRC offers higher after the summer holidays, with targets heard at €700 per tonne ex-works.

Buyer sources pointed that this was a “typical” tactic used by mills, and doubted that the desired price rise could be achieved fully, given the slow rate of consumption.

Market sources said, however, that expected restocking activity could help mills to gain an increase of some €15-20 per tonne.

Published by: Julia Bolotova