HRC buyers in Europe remain quiet, awaiting further price falls

Slow trading persisted in the European hot-rolled coil market on Friday March 1, with mainly hand-to-mouth bookings for small tonnages reported in anticipation of further price falls, sources told Fastmarkets.

Buyers preferred to stay on the sidelines and expect the general downtrend seen in February to continue into March, sources said.

Lead times remained quite short at European producers, so buyers continued to postpone restocking, sources said.

“Mills can deliver HRC in about six to eight weeks, so [there is] no rush from our side,” a buyer in Germany told Fastmarkets. “It looks like there is still room for a price correction.”

Offers continued to be reported at €730-750 ($790-812) per tonne ex-works from integrated mills in Northern Europe, with an offer from a re-roller in the region heard at €690-700 per tonne ex-works.

Buyer estimates of the workable price in the spot market came in at €700-720 per tonne ex-works on Friday.

Fastmarkets calculated its daily steel HRC index, domestic, exw Northern Europe at €715.50 per tonne on Friday, down by €2 per tonne from €717.50 per tonne on Thursday.

The index was down by €6.63 per tonne week on week and by €46.50 per tonne month on month.

Sources told Fastmarkets that output cuts were needed to rebalance the market because there is no prospect of a rebound in end-user demand.

“Mills get no orders [but] they still have order books [for the second quarter] to fill. They cannot be super flexible with prices because, at €700 per tonne [ex-works], costs are already starting to bite. So, it looks like adjusting output would be the logical next step,” a buyer in the Benelux area said.

But mills have made no official announcements so far this week.

In Southern Europe, Fastmarkets’ corresponding daily steel HRC index, domestic, exw Italy was calculated at €707.92 per tonne on Friday, down by €4.58 per tonne day on day from €712.50 per tonne.

The index was also down by €7.08 per tonne week on week and by €47.58 per tonne month on month.

Local suppliers reduced their domestic offers in the spot market to around €720 per tonne delivered (€705-710 per tonne ex-works) in the week to March 1, sources said.

And additional discounts, of up to €10-15 per tonne, were possible for bigger tonnages, according to some market participants.

“There were reports of HRC offers below €700 per tonne ex-works from [domestic HRC producers], but it is not a flat offer price for the spot market, rather it is for big steel service centers and tube makers,” a source in the Italian market said.

In the import market, meanwhile, one big-tonnage deal for Vietnam-origin HRC was heard at around €585 per tonne CFR. The cargo composition was not clear at the time of publication, but several sources said it was a mix of HRC and steel slab.

The price from Vietnam would only be possible for large cargoes, sources said, adding that other offers from Asian suppliers – notably from Vietnam, Taiwan and Japan – were heard at around €610-620 per tonne CFR.

“There are some big buyers in Italy that typically rely on imports and always book [HRC] cargoes from overseas suppliers; this is their business model. For the rest of the market, demand for import [HRC] remains low,” a buyer in Italy said.

Published by: Julia Bolotova