HRC buyers in Europe continue to postpone bookings

Domestic hot-rolled coil prices across Europe were down slightly on Monday October 2 amid persistently weak trading and downbeat expectations at buyers, sources told Fastmarkets.

Slow end-user demand and a poor macro-economic outlook for the fourth quarter of 2023 were limiting buying interest for HRC across Europe, sources said.

“Massive restocking is very unlikely during October. Firstly, our level of inventories is enough, given that demand from end users is deteriorating and we see fewer orders,” a steel service center source in Northern Europe said.

Mills have short order books, with lead times still reported at around six weeks, or even quicker.

Nevertheless, mills were reluctant to cut HRC prices further due to increasing costs of production.

Therefore, market sources expected more European steelmakers to limit production during the fourth quarter of 2023 in attempt to balance the market and prevent a further downtrend.

“All the mills [in Europe] have low order books, but at the same time raw materials prices are moving higher. Electricity, labor costs are also trending up, so it is very likely that we see more furnaces get closed in the coming weeks,” a distributor in Northern Europe said.

Some European steelmakers have already announced maintenance-related blast-furnace stoppages for the fourth quarter.

Offers for November-delivery HRC from one integrated mill in Northern Europe were reported at €630 per tonne ex-works on Monday, stable from a week earlier.

Buyers’ estimations of tradeable values were head at around €600-630 per tonne ex-works, but trading remained very slow.

“Most buyers are still able to wait for a couple more weeks; there is a feeling that prices [for HRC] could decline more,” a steel-service center source in the Benelux area said.

On top of that, buyers were holding back from trading, awaiting more clarity on the import HRC volumes expected to be cleared by customs under safeguards quotas as of October 1.

The European Union’s customs statistics were not updated by the time of publication, but sources expected the quota under the “other countries” category to be filled in “less than a week.”

Vietnam, Japan, Taiwan and Egypt were the major HRC suppliers to the EU under the “other countries” category, with Asian suppliers offering the most competitive prices, according to EU market sources.

Fastmarkets calculated its daily steel hot-rolled coil index domestic, exw Northern Europe at €620.00 ($655.44) per tonne on October 2, down by €0.42 per tonne from €620.42 per tonne on September 29.

The index was down by €11.88 per tonne week on week and by €36.25 per tonne month on month.

Meanwhile, Fastmarkets’ calculated its daily steel hot-rolled coil index domestic, exw Italy at €605.63 per tonne on October 2, down by €3.12 per tonne from the previous calculation of €608.75 per tonne on September 29.

The Italian index was down by €16.04 per tonne week on week and by €31.87 per tonne month on month.

Italian steel market participants described trading in the local HRC market as “frozen” amid subdued end-user demand and downbeat expectations among buyers.

Tradeable values were reported at €630-640 per tonne delivered (€615-625 per tonne ex-works) by producer sources and at no higher than €600-610 per tonne ex-works by buyers.

At the same time, some buyer sources reported bids at €590 per tonne ex-works, and even below that level, for commodity-grade coils. But mills were reluctant to accept such prices yet due to costs.

Meanwhile, HRC import offers to Europe were quite limited and largely uncompetitive, given small gaps with European domestic prices and high safeguards-related risks.

A Japanese supplier was offering January-arrival coil to Italy at €610 per tonne CFR.

A Vietnamese mill was offering HRC with the same lead time below that level — at €590 per tonne CFR.

Turkey-origin HRC was offered to Italy at around €630 per tonne CFR, including the anti-dumping duty.

European buyers had a price idea for overseas coils of no more than €540-550 per tonne CFR.

Published by: Julia Bolotova