Indian HRC quota exhausted, Europe expecting softer steel prices

The European steel market is contending with cheaper flows of Indian hot-rolled coil, with the July-September quota balance of 169,717 mt now exhausted, and material once sitting at the port now allocated to buyers, data from the European Commission showed July 13.

Indian HRC imports were heard as low as Eur1000/mt CIF Italy Ports, according to one European mill source.

“Most European mills are fully booked, not so many deals outside of contracts,” the source said. “There is very little spot. Some are taking positions with Indian imports. Despite the duty price, prices are still good.”

After the news of the EC’s decision to extend the safeguards at the beginning of July, imports booked in April and May have now entered the marketplace, eliciting a temporary bearish effect on HRC Italy prices.

“The main place we are seeing softening of prices is Italy,” the mill source said. “Everyone is expecting a price softening in September. We are in a wait-and-see mode. Now more material is being taken from imports but it’s still not enough, not for all products.”

Since the start of June, Italian HRC prices have decreased Eur30/mt to Eur1100/mt ex-works Ruhr.

HRC Imports were also making their way into the EU from Russia, with Eur1100/mt heard into CIF Antwerp despite the 15% export duty applied to Russian exports.

“I am seeing more availability coming from imports, so I think we are in a negotiable situation with mills. When you have import offers its more hopeful, we have other options” the buyer said. “We are negotiating and using imports to get [domestic prices] cheaper. It will put pressure on prices in Europe.”

Russia’s quota allowance of 416,848 mt now stands at 354,284 mt, or 85% remaining, with 18,455,864 mt awaiting allocation at European ports. The quota balance for Turkey now stands at 26,1820 mt out of the 330,388 mt initial allowance, the data showed.

Although the market does expect some softening over the summer, sources were insistent prices would rebound when customers return from the summer holiday.

“When imports are custom cleared and [arrive] to customers, perhaps the pressure could go down slightly because there is a feeling of better availability, but we know in September we’ll see the same situation,” a German distributor said.

Despite the influx of cheaper imports, sources have said that a steep correction is unlikely given high US steel prices, the removal of the tax rebate on Chinese steel, as well as the chronic lack of availability in Europe.

“Higher sales are possible especially if you grant availability,” an Italy mill source said.

— Amanda Flint