HRC buyers in Europe remain unconvinced about latest push for higher prices

Hot-rolled coil producers in Europe are becoming increasingly bullish, pushing up offer prices despite buyers having mixed feelings about the sustainability of any hikes, sources told Fastmarkets on Wednesday March 8.
Offer prices on May-June delivery HRC in Northern Europe were consolidating around €840-860 ($893-914) per tonne ex-works, they added.

Mill sources reported improving order intakes at end users and expect restocking in March to support any price rises.

But buyer estimates put the the workable price at no higher than €820 per tonne ex-works for small tonnages.

Some buyer sources questioned the sustainability of the current uptrend and even referred to it as a “bubble” given the low end-user demand.

“We do not see an increase in demand from the key consuming industries – automotive and construction,” a distributor in the Benelux area said. “And, in the second quarter, most of the idled [steelmaking] capacities [in the region] will be back online, so the availability of HRC will increase.”

Producer sources, however, said that they have been seeing an increased number of inquiries from the automotive sector in recent days, with original equipment manufacturers (OEMs) also looking to restock.

Fastmarkets calculated its daily steel hot-rolled coil index, domestic, exw Northern Europe, at €824.69 per tonne on Wednesday, up by €6.56 per tonne from €818.13 per tonne on March 7.

The latest calculation of the index was up by €22.01 per tonne week on week and by €67.07 per tonne month on month.

Fastmarkets’ calculation of its corresponding daily steel hot-rolled coil index, domestic, exw Italy, was €795.16 per tonne on Wednesday, up by just €0.16 per tonne from €795.00 per tonne the previous day.

The latest calculation of the index was up by €9.98 per tonne week on week and by €42.82 per tonne month on month.

Local producers were able to offer May-delivery coil at €820-850 per tonne delivered, which would be equivalent to €800-830 per tonne ex-works.

One integrated mill in the south of Italy was only able to offer July-delivery coil due to production issues, sources said.

Buyers, however, indicated that the tradable price would be no higher than €780-800 per tonne ex-works, citing weak sales in the secondary market.

Sources said that distributors and steel service centers were struggling to increase their sales prices due to buyer resistance. Notably, HR sheet was still being traded at €850-850 per tonne CPT in the country’s secondary market, unchanged from last week.

Sources said they now expect big buyers to return to the market to restock by mid-March, although they added that volumes might be limited due to surging prices and uncertainty over the sustainability of the uptrend.

Import offers were limited during the week to Wednesday.

Offers of May shipment coil from Japan were reported at €760 per tonne CFR, while HRC from India and Taiwan was available at €750 per tonne CFR.

But buyer estimates of the achievable prices from those destinations did not exceed €730-740 per tonne CFR.

Published by: Julia Bolotova