European HRC producers try to hold ground despite pressure from buyers

Prices for steel hot-rolled coil in Northern Europe were flat but inched downward in Italy on Tuesday October 10, with buyers seeking discounts amid slower sales to end users and steel mills reluctant to reduce their offers due to increased production costs, sources told Fastmarkets.

Despite slowing consumption and pressure from buyers, European steelmakers were unwilling to cut prices further due to rising costs for raw materials such as coking coal and iron ore.

In addition, negotiations with automotive companies for contracts for the first half of 2024 are scheduled to begin in November and December, and so steelmakers are reluctant to lower their prices ahead of these talks.

Furthermore, some producers have expressed cautious optimism regarding a rebound in apparent steel at the end of November, when buyers need to make bookings for January-arrival coil.

“Import will become less attractive due to CBAM (Carbon Border Adjustment Mechanism) and safeguards issues. We don’t expect the Q1 2024 quota to be filled a fast as it was with the Q4 2023 quota. Buyers will book more European steel,” a steelmaker source said.

Buyers have been putting off restocking for quite some time already and inventories across the supply chain has also been trending lower, so a pickup in apparent steel demand later in the quarter is likely, sources said.

A strong rebound in HRC prices was seen as unlikely due to slow end-user demand, sources added.

Price ideas for HRC with a lead time of 4-6 weeks from mills in Northern Europe were heard at €620-630 ($654-665) per tonne ex-works while buyers’ price ideas were around €600-630 per tonne ex-works.

Producers avoided giving firm generalized offers to the market due to slow demand and downward pressure from buyers.

Trading in the region has remained low, with mainly hand-to-mouth booking for small tonnage reported recently, Fastmarkets heard.

As a result, Fastmarkets calculated its daily steel hot-rolled coil index domestic, exw Northern Europe at €620 per tonne on Tuesday, unchanged from a day earlier.

The index was also stable week on week, but down by €24.79 per tonne month on month.

Fastmarkets calculated its daily steel hot-rolled coil index domestic, exw Italy at €600 per tonne on October 10, down by €5 per tonne from €605 per tonne on Monday.

The index was down by €5 per tonne week on week and by €33.33 per tonne month on month.

Italian buyers were placing bids for November-delivery HRC at €600 per tonne delivered, which would net back to around €585 per tonne ex-works.

Officially, local producers were quoting such material at no lower than €610 per tonne ex-works.

Because of weaker order intake from end users, the availability of HRC in the spot market has increased, with some steel-service centers “selling material really aggressively and pressuring prices further down,” a trading source in Italy said.

The demand for coil in the nation has remained very low, but similarly to Northern Europe, Italian mills were resisting further price drop due to the cost factor.

Import offers were largely uncompetitive, with most Asian producers offering HRC to Europe at around €600 per tonne CFR.

Only Vietnamese mills were offering HRC at lower levels – at around €580-585 per tonne CFR to Italy, but this was still not considered workable for the European buyers.

Published by: Julia Bolotova