HRC buyers in Europe postpone restocking amid lack of clarity on price trend, slow consumption

Hot-rolled coil buyers in Europe have postponed restocking amid mixed views on the future direction of prices and insufficient end-user demand, sources told Fastmarkets on Tuesday September 5.

A lack of support from end-user demand remained the main obstacle to the HRC price increases announced by some producers at the end of August, sources said.

European mills are aiming for €700 ($755) per tonne ex-works or delivered, depending on the region, for October-delivery HRC.

At the same time, some producers have continued selling HRC at €650-660 per tonne ex-works, sources said, with transactions at this level reported in Germany this week.

Buyer sources indicated that the tradable level in Northern Europe was €640-660 per tonne ex-works.

But trading sources reported HRC offers from Italy to Germany at around €680 per tonne delivered.

Buying activity remained sluggish on September 5, however, with buyers postponing purchases, citing uncertainty over the direction of prices, Fastmarkets understands.

“For a sustainable HRC price rebound we need stronger consumption. Even [the steel] mills are not convinced they are going to see an increase in [the number of] deals. Buyers are very hesitant and are not rushing into bookings,” a trading source in Germany said.

“Basically, the current prices in the [HRC] spot market are practically the same as before the summer closures; maybe we managed to get around €10 higher in some deals, but not more. The market is static despite some bullish attempts [by the EU mills],” a mill source said.

Fastmarkets calculated its daily steel hot-rolled coil index domestic, exw Northern Europe at €655.33 per tonne on September 5, down by €3.84 per tonne from €659.17 per tonne on September 4.

The index was, however, up by €4.94 per tonne week on week and up by €9.50 per tonne month on month.

At the same time, Fastmarkets’ calculation of its corresponding daily steel hot-rolled coil index domestic, exw Italy, was €635.42 per tonne on September 5, down by €2.91 per tonne from €638.33 per tonne on September 4.

The Italian index was stable week on week but down €0.83 per tonne month on month.

Italian buyers were also in no hurry to make any bookings, with several sources suggesting that restocking activity would not start until closer to the end of September.

“Buyers are testing the market. Obviously, the increases some mills are aiming for are unrealistic,” a buyer source said.

An integrated mill in Italy was said to be offering October-delivery HRC at €700 per tonne delivered (€680-685 per tonne ex-works), but no trades were reported at that level.

Buyers said the achievable level was around €625-640 per tonne ex-works.

Import offers from India and South Korea for October-November shipment were reported at €610-630 per tonne CFR to Italy, but those prices levels were not considered competitive by European buyers, especially given the long lead times and high safeguard-related risks for some origins.

Published by: Julia Bolotova