European steel HRC producers test market with higher offers

European producers of steel hot-rolled coil have tested the market with higher offer prices amid mounting costs, industry sources told Fastmarkets on Wednesday October 2.

Several trading sources told Fastmarkets that a leading European steelmaker has increased its offer price for November-delivery HRC to €590 ($655) per tonne, ex-works or delivered, depending on the region. This was up by €40 per tonne from previous offers.

But these new prices had yet to be sealed in deals, market sources said, with buyers still digesting them.

Other European suppliers have been considering similar price rises of €30-40 per tonne, the sources added.

“The lowest [HRC] prices are no longer available. But higher offers have not traded yet,” a buyer said.

Buyers’ estimates of tradeable values were heard at €530-550 per tonne ex-works on October 2. But market sources suggested that the lower end of that range may no longer be available from some suppliers.

“The market is at a turning point. The increase [in HRC prices] is necessary for producers, because of costs. Plus, China has become optimistic after [publication of its recent] stimulus package and has started to increase offers, bolstering global markets,” a second buyer said. “However, consumption remains low – that is a stumbling block.”

Trading remained quiet on Wednesday, with market sources expecting more clarity next week.

“Thursday and Friday [October 3-4] are public holidays in Germany, so the market will be quiet. The ‘Golden Week’ in China [for its National Day holiday] is still on. So when everyone comes back to the market [in the week starting October 7] we will have a better understanding about prices,” a mill source said.

Fastmarkets calculated its daily steel hot-rolled coil index, domestic, exw Northern Europe, at €544.38 per tonne on Wednesday, up by €7.39 per tonne from €536.99 on October 1.

The index was, however, down by €5.50 per tonne week on week and by €45.62 per tonne month on month.

In Southern Europe, Fastmarkets’ corresponding daily steel hot-rolled coil index, domestic, exw Italy, was €535.00 per tonne on Wednesday, up by €2.00 per tonne from €533.00 per tonne the previous day.

The Italian index was down by €9.38 per tonne week on week and by €55.00 per tonne month on month.

Offers from a domestic supplier were heard at €550 per tonne delivered. This would be equivalent to €535-540 per tonne ex-works, according to trade sources.

Buyer sources estimated tradeable values at €520-530 per tonne ex-works.

At the same time, market sources said that they were expecting local mills to try to increase their offer prices soon. No official announcement has been made yet, however.

As for imports, the markets have remained quiet due to public holidays in Asia. But market sources suggested that imports would remain uncompetitive in Europe because of trade restrictions, long lead times and relatively high prices.

For example, the latest European Commission customs data showed that HRC tonnages from Vietnam awaiting allocation came to 242,292 tonnes on October 1, but the quarterly allowance for the country for October-December was only 141,850 tonnes.

A similar situation was seen for Japan. On the same date, the tonnage awaiting allocation was 251,333, exceeding its similar 141,850 tonnes quarterly allowance for October-December.

For Egypt, tonnages awaiting allocation totaled 144,517 tonnes on October 1, and for Taiwan the figure was 155,950 tonnes. The quarterly allowance for each country was also 141,850 tonnes.

This meant that imports from these origins would be subject to safeguarding duty. In addition, material from these four origins, which account for nearly half of the EU’s total HRC imports, were also subject to an anti-dumping investigation.

“One thing is clear – importing HRC is not workable in Europe at the moment,” a buyer in Italy said.

New offers from Asian suppliers were expected in the next week.

Published by: Julia Bolotova