European steel HRC producers seek higher prices on mounting costs

European producers have increased their domestic offer prices for steel hot-rolled coil because of rising costs, while buyers were holding back from the market to assess the situation, sources told Fastmarkets on Tuesday October 17.

Major steelmakers have gradually started pushing for higher prices, seeking a €15-20 ($16-21) per tonne increase, claiming that the increases were necessary to cover input costs.

“Current prices [for HRC] are unsustainable,” a steelmaker source told Fastmarkets.

In general, HRC offers were reported to be around €645-650 ($680-685) per tonne ex-works from three integrated steelmakers in Northern Europe, compared with €630 per tonne heard last week.

Lead times from local mills varied between four and six weeks, sources said.

Buyers were cautious about the attempt to raise prices, claiming that mills’ order books were too weak and demand too slow to support even a small rise.

“Spot market activity in Northern and Southern Europe is still not significant,” a second steelmaker in Northern Europe said.

“Mills have low order books, and on a firm bid they still would negotiate a discount,” a steel service center in Northern Europe said. “It looks like [the steelmakers] want to stop the downtrend with this increase and signal to the market that the bottom has been reached.”

Buyers’ estimates of tradeable values were heard at €600-620 per tonne ex-works on Tuesday. Mills, however, claimed that the lower end of that range was “below costs” for them.

Even though inventory levels were trending lower at steel service centers and distributors, they continued to postpone restocking, market sources said.

“Buyers will come back for volumes when they have the understanding that, if they don’t book today, tomorrow [HRC] will be more expensive,” a third mill source said.

“More and more customers are out of stock. But they are still buying carefully,” a trading source said.

Fastmarkets calculated its daily steel hot-rolled coil index domestic, exw Northern Europe at €618.57 per tonne on October 17, up by €3.82 per tonne from €614.75 per tonne on October 16.

The index was down by €1.43 per tonne week on week, and down by €16.31 per tonne month on month.

In Southern Europe, meanwhile, Fastmarkets calculated its corresponding daily steel hot-rolled coil index domestic, exw Italy at €592.71 per tonne on October 17, down by €2.29 per tonne from €595.00 per tonne on October 16.

The index was also down by €7.29 per tonne week on week and by €33.29 per tonne month on month.

In Italy, tradable values for HRC were reported by buyers at €580-590 per tonne ex-works, while producers tried to keep offers at a minimum of €600 per tonne-ex-works.

But after other European steelmakers attempted to increase their prices, market sources suggested that Italian mills would follow suit and try to push offers higher as well.

Trading in the spot market remained very quiet, however, with steel service centers and distributors “aggressively destocking,” according to market sources.

For imports, two sources reported HRC offers at $600 per tonne CFR from Japan for end-December shipment, noting that some Japanese producers were starting to become aggressive with their offers.

Another trader said that Japanese producers were offering HRC to Europe at prices no lower than $620 per tonne CFR.

In general, most HRC offers from Asia were in the range of €580-600 per tonne CFR for December shipment.

Published by: Julia Bolotova