European steel HRC buyers still holding back, despite lower offers

European buyers of steel hot-rolled coil are continuing to postpone their restocking activity, awaiting further price drops, industry sources told Fastmarkets on Wednesday February 28.

Trading in the European spot market for HRC has been extremely quiet in recent weeks, with buyers abstaining from bookings, even though HRC prices have decreased since January.

“Lead times from mills are quite short, so we are not in a hurry. It looks like there is still room for some [price] drops,” a stockholder in Germany said.

“Stocks are not really full at buyers, but they are happy to live ‘hand-to-mouth’, and low end-user demand allows that,” a mill source said.

Integrated mills in Northern Europe were offering HRC with April delivery at €730-760 ($792-825) per tonne ex-works, compared with targets of €780-800 per tonne given in January for second-quarter delivery material.

Buyers’ estimates of tradeable values were in the range of €700-730 per tonne ex-works.

A Germany-based steelmaker was reported to have made a booking “close to €700 per tonne ex-works” recently, but market sources were not certain about the details of the deal at the time of publication.

“When a booking is done for special grades or dimensions, extras can [cost] as much as €300 per tonne or even more. In such cases, the base price doesn’t really matter [because] the mill is making money on the extras,” a buyer in Germany said.

Most industry sources agreed that €700 per tonne ex-works “was not there yet” in Northern Europe, but buyers have been actively pushing mills to this price point.

As a result, Fastmarkets calculated its daily steel hot-rolled coil index, domestic, exw Northern Europe, at €716.04 per tonne on Wednesday, down by €2.92 per tonne from €718.96 per tonne the previous day.

The index was also down by €7.09 per tonne week on week and by €35.21 per tonne month on month.

In Southern Europe, Fastmarkets’ corresponding daily steel hot-rolled coil index, domestic, exw Italy, was calculated at €711.88 per tonne on Wednesday, down by €3.12 per tonne from €715.00 per tonne on February 27.

The index was down by €10.06 per tonne week on week and by €33.12 per tonne month on month.

One local supplier was offering April-delivery HRC at €720-730 per tonne ex-works.

But market sources reported sales done at a lower price of €720 per tonne delivered (€710 per tonne ex-works).

Some bids were reported as low as €700 per tonne delivered (around €690 per tonne ex-works), but most industry sources believed that this price had not been accepted by suppliers yet.

Another local integrated flat steelmaker, which was put into extraordinary administration earlier this month, was not offering HRC at the moment.

“The absence of ADI doesn’t really affect the price [for HRC in Italy],” a source in the Italian market said. “But the additional volume that will not come from it will have to be replaced, either by imports or by European material.”

In the secondary market, 4mm HR sheet was traded at prices no higher than €780-790 per tonne CPT, sources said, compared with €820-830 per tonne CPT in early February.

Imports were still unattractive for European buyers despite the lower offer prices from some suppliers.

Collateral risks – such as long lead times in a very volatile market and uncertainties regarding the extension of EU safeguard measures – were the major factors limiting the buying interest for imports.

Offers of late-April-May shipment, July-delivery HRC from Vietnam were heard at €620 per tonne CFR on Wednesday. Bids were heard at €600 per tonne CFR.

Offers from Japan and Egypt, meanwhile, came in at €640-650 per tonne CFR, also for April-shipment HRC.

Published by: Julia Bolotova