Market participants were quick to stress the difference between spot and contract settlement levels in the European hot-rolled coil market Nov. 24, as mills continue to trade lower to secure production before the holidays.
Platts assessed hot-rolled coil in Northwest Europe down Eur5/mt on the day, at Eur605/mt ex-works Ruhr.
Sources reported deals at Eur600-620/mt ex-works Ruhr, with most falling toward the lower end of the range amid bearish sentiment.
Offers from South European mills were even heard below the Eur600/mt ex-works level, at Eur600/mt delivered Northern Europe ex-Italy.
Mills were said to be attempting price increases for next year, but distributors were skeptical given a lack of improvement in their sales volumes or prices to end-consumers, and the illusory recovery of apparent demand on first-quarter enquiries.
“Various service centers are trying to improve their prices, but others are struggling, creating a wide gap between what different companies are offering,” one distributor said. “On the mill side, they are attempting higher prices for next year’s deliveries as they’re at costs or below; if they don’t realize a price increase now, they’ll lose Q1 to the downtrend.”
The source expects additional mill closures in the near term, seeing a sustained mismatch between current supply and demand.
“Mills are trying to increase the prices a bit, but I still don’t feel that demand is getting much stronger,” another distributor said. “At least it seems not to be moving much further down.”
In the background, mills have been negotiating long-term contract prices with larger buyers, including in the automotive sector, but both buy- and sell-side sources stressed that current spot transaction levels could not be applied to contracts.
With many mills under their margins and demand at an almost-unprecedentedly poor level throughout H2 this year, steelmakers have had to reduce prices significantly against rising energy costs to sustain production.
Contract price targets were heard at Eur700/mt ex-works minimum on the day from the buy side, with current negotiations heard falling between Eur800-900/mt ex-works.
In the South European market, the Platts domestic HRC assessment was unchanged at Eur600/mt ex-works Italy as buyers digest attempted price increases, with HRC heard offered at Eur630-650/mt ex-works for January delivery.
New import offers were not yet heard after some Far Eastern origins withdrew from the market, besides the now-duty free Indian material, which was still settling in the market.
Buyers were said to be interested in import material given perceived visibility of a price floor in the domestic market.
Platts assessed HRC, CIF South Europe, up Eur20/mt on the day, toward offers heard from trader sources at around Eur610/mt CIF ex-India and Korea.
Platts is a part of S&P Global Commodity Insights.
— Benjamin Steven