European HRC producers mull price increases; buyers stay on sidelines

Europe’s hot-rolled coil market remained in wait-and-see mode on Tuesday June 11 in expectation of new offers, although buyers remain unconvinced about a price rebound amid limited demand, sources told Fastmarkets.

Since June 7, some integrated flat steel producers have withdrawn offers, and market participants told Fastmarkets they expect them to come back shortly with increased prices.

One integrated mill in the Benelux area has reportedly increased its offer prices for July-August delivery by around €20 ($22) per tonne to €650-660 per tonne ex-works.

Sales were reported within that range, but for only for small volumes.

“This [increase of €20 per tonne] is a reasonable price rise, considering costs of production,” a supplier source said. “Getting even €10 per tonne above that would be impossible due to [the lack of] demand.”

In general, trading remained weak on Tuesday, with sources pointing out that most suppliers in Europe were “strongly looking for orders” and had short order books.

“Demand is low, restocking is very modest and we are heading into summer, so a strong rebound [in demand] is unlikely. Mills [in Europe] are actually hungry for orders,” a steel service center source in Germany said.

In Germany, offers were heard at €640-650 per tonne delivered – equivalent to €630-640 per tonne ex-works for July-delivery coil.

Buyers estimated achievable prices at €620-640 per tonne ex-works.

Sources told Fastmarkets they expect a major European steelmaker to come back to the market with higher prices by the end of this week and suggested that the move might be “a wake-up call for the market.”

Fastmarkets calculated its daily steel hot-rolled coil index domestic, exw Northern Europe at €635.42 per tonne on Tuesday, up by €0.67 per tonne from €634.75 per tonne on Monday.

The index was up by €1 per tonne week on week but down by €4.58 per tonne month on month.

Meanwhile, Fastmarkets calculated its corresponding daily steel hot-rolled coil index domestic, exw Italy at €631.25 per tonne on Tuesday, up by €1.25 per tonne from €630.00 per tonne on the previous day.

The index was down by €0.75 per tonne week on week and by €5.83 per tonne month on month.

No major price changes or trading were reported in the Italian HRC market this week.

An Italian supplier was heard offering July-August delivery HRC at €650 per tonne delivered, which nets back to €635-640 per tonne ex-works.

“[An Italian mill] has a short portfolio and proposed to roll over [HRC prices] to book some tonnages,” a buyer source in Italy said.

Trading remained weak, however, after the announcement of an extension in EU import safeguard measures.

“There are strong discussions in the market; buyers are worried about price hikes, but nothing has happened so far,” a second buyer said. “The market is waiting for the [European] Commission to confirm new safeguards and publish an official document.”

The imported HRC market was also quiet.

Some suppliers withdrew offers after the news on EU safeguards, while others were testing the market with higher offers, sources said.

And some Turkish suppliers were reportedly trying to increase offers by around €20 per tonne.

On Tuesday, offers of Turkish HRC were heard at €610-630 per tonne CFR, including the anti-dumping duty.

August-shipment HRC from Saudi Arabia was offered to Southern Europe at €635 per tonne CFR, but most buyers described this offer as “unworkable.”

“The gap between domestic and import HRC has to be at least €50 per tonne to make imports attractive – taking into account all risks,” a buyer said.

From South Korea, offers were reported at €600-610 per tonne CFR.

Published by: Julia Bolotova

fastmarkets.com