HRC buyers in Europe postpone restocking, await greater clarity on Q4 import volumes

Hot-rolled coil prices in Europe remained under pressure from low demand and a downbeat mood among buyers due to expectations for a high volume of imports during the fourth quarter, sources told Fastmarkets on Wednesday September 13.

Trading in the European HRC market has been very limited in the recent weeks, with most buyers seen to be postponing any restocking until early October while they await more clarity regarding import volumes.

“Everybody is waiting for the start of the fourth quarter to see what will happen when custom clearance [of imported HRC] will start for the new quota period. It’s a bit of a gamble, but on the other side it’s a buyers’ market today,” a trader in the Benelux area said.

“Most buyers postpone making purchases, there is very limited restocking across some grades and dimensions but that’s all,” a trader in Germany said.

Estimations of tradeable values for HRC in Northern Europe were reported at €630-650 ($676-698) per tonne ex-works on Wednesday.

Most mills in the region still could offer October/November-delivery coil, which indicated weak order books.

One producer in Germany was said to be offering December-delivery coil already. But this information was not widely confirmed by buyers.

In general, offers for October/November-delivery coil in the region were reported within the range of €640-685 per tonne ex-works. The upper end, however, was deemed to be totally unworkable by buyers.

As a result, Fastmarkets calculated its daily steel HRC index domestic, exw Northern Europe, at €642.08 per tonne on Wednesday, down by €2.92 per tonne from €645 per tonne on Tuesday.

The index was down by €6.52 per tonne week on week, and down by €2.50 per tonne month on month.

Meanwhile, Fastmarkets’ calculation of its corresponding daily steel HRC index domestic, exw Italy, was €627.33 per tonne on Wednesday, down by €5.17 per tonne from €632.50 per tonne on Tuesday.

The Italian index was down by €7.67 per tonne week on week, and down by €6.35 per tonne month on month.

Market conditions in Italy were similar to those in Northern Europe.

Italian buyers preferred to hold back from trading, struggling to consolidate higher prices downstream.

“HR sheet is being sold in the secondary market barely at €700 per tonne delivered in Italy, so there is no way Italian mills can get €700 per tonne delivered for HRC,” a third trader said, referring to target level voiced by some mills in early September.

A mill source estimated achievable values for HRC in Italy at €630-640 per tonne ex-works.

Buyers’ price idea was around €615-620 per tonne ex-works but trading in Italy was generally very quiet, sources told Fastmarkets.

Mill sources pointed out, however, that such levels were very close to the cost line already.

Sources did not rule out a repeat of the situation in the European HRC market last year when local mills started to gradual take capacity offline to avoid further price declines.

“Reducing [HRC] output might help, but it will have a delayed effect in the market; if mills start idling furnaces in October, the market will see the effect in the first quarter of 2024,” a mill source in Italy said.

Imports HRC offers to Europe were stable on Wednesday from a day earlier but interest for imported coil was also quite low.

Asian suppliers were offering January-delivery HRC at €590-615 per tonne CFR to Italy, with the lowest offers coming from Taiwan.

Italian buyers estimated workable prices for overseas coil to be around €56-565 per tonne CFR, but no such offers were available at present.

Published by: Julia Bolotova