European HRC producers reject lower bids despite low orders, citing costs

Prices for steel hot-rolled coil across Europe were stable to slightly weaker on Wednesday September 27, with steelmakers tending to reject lower bids despite weak orderbooks as costs start to bite, sources told Fastmarkets.

Fastmarkets calculated its daily steel hot-rolled coil index domestic, exw Northern Europe, at €625.63 ($662.05) per tonne on September 27, down by €2.45 per tonne from €628.08 per tonne on September 26.

The index was down by €9.25 per tonne week on week and by €18.12 per tonne month on month.

Trading in the region has been persistently weak throughout September.

Slowing consumption and a poor macroeconomic outlook were limiting purchasing activity in the spot market, according to sources.

“We can wait a couple weeks more to make any bookings; our inventories are enough for the current levels of demand [from end users],” a stockholder in Germany said.

Mills had short orderbooks and could offer HRC with 5-6 weeks lead times, sources said.

But producers tended to reject lower bids despite low orders, citing mounting input costs.

Notably, a bid for HRC in the region was reported at €590 per tonne ex-works, but an integrated mill had reportedly rejected it.

“€600 [per tonne ex-works] is already a breakeven price for us, anything lower than that would be just lossmaking,” a mill source said.

Producers avoided giving generalized offers to the market, claiming that “buyers just talk the price down and make no bookings.”

Estimations of tradeable values from the mills in Northern Europe were heard at €620-640 per tonne ex-works.

Buyers gave indications of €610-630 per tonne ex-works, and one source reported a bid a €600 per tonne ex-works, but it was not clear by the time of publication whether it was accepted by the seller.

Sources agreed that output cuts at European steelmakers could help balance the oversupplied market. Nonetheless, the effects of the reduced output will likely only be seen in the first quarter of 2024.

“We need to see European steelmakers gradually switching off furnaces – that would create supply concerns and motivate buyers to make bookings for the first quarter [of 2024]. But so far, only a few mills [have cut output],” a trading source in the region said.

Meanwhile, Fastmarkets’ calculated its daily steel hot-rolled coil index, domestic, exw Italy, was €608.96 per tonne on September 27, down by €4.79 per tonne from €613.75 per tonne the previous day.

The Italian index was down by €13.12 per tonne week on week and by €26.04 per tonne month on month.

Trading in Italy was said to be largely non-existent, with buying interest for both domestically produced and imported HRC close to nil.

Early November-delivery coil was offered by Italian mills around €630-640 per tonne delivered, which would net back to €615-625 per tonne ex-works.

Bids were reported at €570-590 per tonne ex-works on Wednesday, but those were not accepted by the mills due to the costs factor.

“Mills will defend €600 per tonne ex works as a threshold, the line they wouldn’t like to cross. [We] will see how situation with imports shapes in October, probably by the end of the month buyers will return to the market and start bookings for January delivery,” a buyer in Italy said.

Meanwhile, buying interest for imported coil was also very weak in Europe, mainly due to the long lead times, the small gap with domestic prices and safeguard-related risks.

HRC from Asian countries was said to be on offer at €600-610 per tonne CFR Italy for January arrival, with only Vietnamese mills offering below that levels – at €585 per tonne CFR.

Bids from European buyers were no higher than €540-550 per tonne CFR.

Therefore, no new business for overseas coil was reported over the past week due to the bid-offer mismatch.

Published by: Julia Bolotova