HRC buyers in Europe continue holding back from trading

European buyers of hot-rolled coil remain focused on reducing their stock levels amid slow downstream sales, with prices still under pressure, sources told Fastmarkets on Thursday September 21.

Fastmarkets calculated its daily steel hot-rolled coil index domestic, exw Northern Europe at €633.75 ($677.43) per tonne on September 21, down by €1.13 per tonne from €634.88 per tonne the previous day.

The index was down by €7.50 per tonne week on week and by €0.83 per tonne month on month.

Buyers estimated tradeable price levels at €620-650 per tonne ex-works.

Offers from integrated mills in the region for HRC with lead times of five to six weeks were heard between €630-670 per tonne ex-works.

A re-roller from the Benelux area was heard offering HRC to the region at €625 per tonne delivered.

In general, trading remained quite thin in the European HRC market, despite some lower offers available and short lead times.

Slow sales to end-users led to destocking at stockholders, steel service centers and slower purchasing in the upstream market as a result.

“The main problem is the lack of demand. Our sales [to end-users] are down 15-20% on-year,” a distributor in Northern Europe said.

“We are not in a hurry [to book HRC], we do not even inquire mills about prices,” a second distributor in the region said. “Stock level is not high, but more than enough for the current demand levels,” he added.

At the same time, producer sources said that any steep HRC price drops were unlikely due to rising production costs.

“Rollover [of domestic HRC prices] is the most likely scenario for October. I don’t think import volumes that are waiting in ports and will be released to the market in October will pressure the domestic HRC market significantly,” a mill source said. “Those bookings [for import HRC] were done in the end of the second quarter, when the gap between domestic and import prices was over €100 per tonne. Since that time, domestic prices have dropped so the gap won’t be that dramatic.”

Meanwhile, Fastmarkets’ calculation of its daily steel hot-rolled coil index domestic, exw Italy was €622.50 per tonne on Thursday, up by just €0.42 per tonne from €622.08 per tonne on Wednesday.

The Italian index was, however, down by €5.83 per tonne week on week, and down by €7.50 per tonne month on month.

Buyers’ ideas of a tradeable price level for HRC in the nation were generally no higher than €610-630 per tonne ex-works.

An offer from an integrated mill in the region for late-October delivery coil was heard at €650 per tonne delivered, which nets back to about €635 per tonne ex-works.

Italian buyers had a similar attitude and were not chasing for new orders, focused instead on destocking.

Import HRC offers to Europe from Asian countries were reported at €585-610 per tonne CFR to Italy for January-arrival, with the lower end available from Vietnamese suppliers.

Indian mills were reportedly out of the market in the week to September 21.

The demand for imported coil remained low due to long lead times and the relatively small gap with domestic prices.

“The prices for import [HRC] should be way below €600 per tonne CFR, maybe at €540-550 per tonne [CFR] maximum, given safeguards quota risks and dull market in general,” a buyer in Italy said.

Published by: Julia Bolotova