HRC buyers in Europe hold back from trading; rock bottom said to be near

Trading remained extremely slow in the European hot-rolled coil markets on Friday April 5, but mills resisted further price drops, sources told Fastmarkets.

HRC buyers across Europe maintained a hand-to-mouth approach to bookings, shunning large-tonnage purchases, Fastmarkets heard.

“Mills have short order books and quick lead times, therefore buyers can 100% live hand-to-mouth with such levels of end-user demand,” one buyer source said.

Demand from key steel-using sectors has dropped by around 15-20% year on year and this has affected purchases, several sources said.

Buyer ideas of achievable HRC prices in Northern Europe were mainly reported at €650-660 ($705-716) per tonne ex-works.

Northern European suppliers kept offers at €660-680 per tonne ex-works, with lower prices available for big tonnages, according to sources. Lead times were heard to be around six to eight weeks.

“Of course, producers can give a discount if you put a decent tonnage on the table. But these days, trading is almost zero,” a distributor in Germany told Fastmarkets.

“Mills are hungry for orders, but at the same time, [they are] not prepared to give in to extremely low prices due to production costs,” a trader in the Benelux area said.

Fastmarkets calculated its daily steel HRC index domestic, exw Northern Europe at €657.08 ($712.91) per tonne on Friday, down by €3.13 per tonne from €660.21 per tonne on Thursday.

The index was down by €6.67 per tonne week on week and by €57.17 per tonne month on month.

Despite talk of potential output cuts, producers have refrained from making official announcements so far, Fastmarkets understands.

“Output cuts were needed a month or two ago, so we could see the effects in the second quarter,” a steel service center source said.

In Southern Europe, Fastmarkets’ daily steel HRC index domestic, exw Italy was calculated at €635.83 per tonne on Friday, down by €0.84 per tonne from €636.67 per tonne on Thursday.

The index was down by €9.17 per tonne week on week and by €57.14 per tonne month on month.

HRC offers in Italy were mainly heard at €650-660 per tonne delivered, which is equivalent to €640-650 per tonne ex-works.

May lead times were reportedly still available from a local supplier, market sources said.

“All prices are only theoretical numbers, since there is no trading at all,” a buyer in Italy told Fastmarkets.

In the past week, sources reported slightly better trading downstream, with end-users said to be seeking tonnages, but prices remained weak due to oversupply.

In the secondary market, 4mm HR sheet was heard traded at no higher than €730-750 per tonne CPT, with some steel service centers reported to be offering as low as €720 per tonne CPT.

“Margins are squeezed at distributors; there is tough competition [in downstream markets],” a distributor in Italy said.

June-shipment HRC offers from Vietnam and Japan were generally around €570-580 per tonne CFR, but buying interest has remained low, Fastmarkets heard.

“Import prices from Asia would be already for HRC [cleared by EU customs in October] – price should be lower for such long lead times,” a trader in Italy said.

From Turkey, offers of June-shipment coil were heard at €600-605 per tonne CFR, including the anti-dumping duty.

Published by: Julia Bolotova