HRC market in Europe remains quiet amid lack of trading; mills reportedly mull rises amid rising costs

Steel hot-rolled coil prices in Europe were largely flat on Monday October 16, but some producers are reportedly mulling price increases despite weakened demand, citing high costs, sources told Fastmarkets.

Distributors and steel service centers (SSCs) in Northern Europe have adopted a “hand-to-mouth” procurement plan and continue to avoid restocking in a volatile market, sources added.

“In fact, destocking is still taking place; in the downstream market, SCCs are competing for volumes. We expect no restocking in October and November,” a source at a SSC in Germany said.

Despite pressure on prices and slow end-user demand, European producers are said to be resisting further price cuts due to high costs.

“The prices for iron ore and coking coal are rising worldwide, while [the HRC market] remains under pressure, and mills have started losing money,” a source in Northern Europe said.

Some integrated producers in Northern Europe reported offers for November-December delivery coil at €630-640 ($662-673) per tonne ex-works, saying this was the “bare minimum due to costs.”

At the same time, buyers’ price ideas were no higher than €600-620 per tonne ex-works.

Lead times were said to be quite short, with one mill able to HRC “within four to six weeks.”

Several sources told Fastmarkets that some European mills were mulling price increases, but pointed out that it would be “a completely cost-driven increase with no support from demand.”

“We heard that [a market leader] plans to announce a price increase for HRC this week [from October 16],” a trading source said.

That, however, was not widely confirmed by other sources by the time of publication.

Fastmarkets calculated its daily steel hot-rolled coil index domestic, exw Northern Europe at €614.75 per tonne on October 16, down by just €2.33 per tonne from the previous calculation of €617.08 per tonne on October 13.

The index was also down by €5.25 per tonne week on week, and down by €20.13 per tonne month on month.

In Southern Europe, meanwhile, Fastmarkets calculated its corresponding daily steel hot-rolled coil index domestic, exw Italy at €595.00 per tonne on October 16, up by just €1.98 per tonne from €593.02 per tonne on October 13.

The index was also down by €10 per tonne week on week and by €31 per tonne month on month.

Italian mills have reportedly been rejecting bids from buyers coming in at €600 per tonne delivered (€585 per tonne ex-works), several sources told Fastmarkets.

November-delivery coil was still available from some local suppliers, sources said.

Producers were trying to maintain offers at €600 per tonne ex-works and above due to costs, while buyers’ price ideas were largely below €600 per tonne ex-works.

Distributors and SSCs in the country were also largely focused on destocking, and therefore were not really interested in new HRC bookings.

“[Hot-rolled] sheets are being sold at around €680 per tonne CPT in the secondary market, and sometimes even below that. There is oversupply and some companies [SSCs, distributors] have lead times of just a couple of days,” a trading source in Italy said.

Imports from Asia for end-January/February delivery were on offer to Italy at around €580-600 per tonne CFR — a price level deemed totally unworkable by Italian buyers.

Published by: Julia Bolotova