HRC prices climb higher in Europe on tight supply

Domestic prices for hot-rolled coil across Europe continued to climb on Wednesday January 10 on bullish offers and limited supply, sources told Fastmarkets.

Major integrated steelmakers in Northern Europe increased their offer prices for April-delivery HRC to €800 ($875) per tonne EXW, following a similar move by ArcelorMittal earlier this week.

But most buyers said that such an offer price was “unrealistic,” considering the lack of support from real steel demand.

“European mills are trying to bring spot prices in line with long-term contracts,” a buyer in the Benelux region told Fastmarkets.

“Most mills have quite good order books and the lack of competitive imports is also supportive of a price rise, but not to the level of €800 per tonne ex-works,” the buyer added.

Buyer estimates of the tradable value varied between €700 per tonne ex-works and €740 per tonne ex-works.

The range is quite wide because most buyers have just returned to the market after a two-week winter holiday break and are still digesting the new prices.

“It’s hard to say what the real market level is. We will see in the following weeks, when restocking starts, but it seems realistic that the mills will be able to consolidate at around €740-750 per tonne ex-works in January — but no higher,” a steel service center source said.

Sources said they expected to see “cautious” restocking, with bookings likely to be limited to “what is strictly necessary” in terms of tonnages, because the sustainability of the acute uptrend in the flat steel market is still questionable.

“Real steel demand is not there,” a buyer in Germany said. “It’s not going down, but it’s not moving up either — so these steep price rises seem to gaining strength from supply issues,” the buyer added.

Fastmarkets calculated its daily steel hot-rolled coil index domestic, exw Northern Europe at €728.75 per tonne on January 10, up by €5.42 per tonne compared with €723.33 per tonne on Tuesday January 9.

The index was also up by €33.33 per tonne week on week and by €43.33 per tonne month on month.

In Southern Europe, meanwhile, Fastmarkets calculated its daily steel hot-rolled coil index domestic, exw Italy at €715.00 per tonne on January 10, increasing by €10 per tonne from €705.00 per tonne on January 9.

The index was up by €25.42 per tonne week on week and by €49.58 per tonne month on month.

An offer for March delivery coil from one integrated mill in Italy was heard at €720 per tonne delivered (equivalent to €705 per tonne ex-works).

But sources told Fastmarkets that the price from that mill was not really reflective of the market because it has “has financial problems and is quite unreliable.”

Another integrated mill in Italy was said to be about to give a firm offer price by the end of this week, with buyers expecting that to come in around €770 per tonne delivered (or €755 per tonne ex-works).

On Wednesday, buyer sources estimated the market level at €700-730 per tonne ex-works and said that tighter supply was likely to continue to support price rises through January.

“Italy is traditionally more open and more reliant on import deliveries. Now, with [the EU] quota for ‘other countries’ already exceeded and ongoing shipping problems in the Suez canal, imports are not really manageable,” a buyer source in Italy said.

“Overseas [HRC] suppliers are largely out of the market with very few offers heard this week,” the source added.

As of January 9, around 1.23 million tonnes of HRC was awaiting allocation in the “other countries” category in the first quarter of 2024, despite the quota being set at just 923,594 tonnes, according to EU customs statistics.

Sources told Fastmarkets that the duty to be paid on imports of HRC under this category was likely to be around 6.3%.

There were few overseas offers of HRC to Europe on Wednesday, but one Indian supplier was offering March-shipment HRC at €650 per tonne CFR, Fastmarkets understands. However, several sources suggested that this offer was no longer standing and new offers from India will be closer to €700 per tonne CFR to Europe.

And HRC from South Korea was on offer at €660-670 per tonne CFR to Italy.

Published by: Julia Bolotova