Prices continue to be weak for coil derivatives with the market slow. Sales volumes of both sheet and tube remain weak. The sector is looking at the Tube & Wire trade fair in Düsseldorf which sources hope it may stimulate some buying activity, sources tell Kallanish.
This week the market continues to be quiet. A service centre source says that demand resumed slightly in April. His order books are being filled and lead times are lengthening.
An agent however and another service centre report that volumes have not properly returned and the current orders are delivered at low prices, strongly impacting company results. In Dusseldorf multiple sources report high attendance in the flat world from all over Europe but “nothing concrete is achieved. Contracts are not being agreed,” a source from the trade show comments.
Today the main point of concern is that service centres’ and end-users’ margins are squeezed. The current price of sheet is unsustainable considering coils prices. Sheets sellers do not have the support to increase values. End-users report low values and throughout the value chain sources do not believe in durable increases for hot rolled coils. Some European HRC producers are mulling price hikes to stop the current slide and on the basis of stable import volumes from Asian countries. According to a source, EU levels may rise by about €30/tonne ($32) after the Düsseldorf event.
While Italian HRCs contracts hover at €620-630/t delivered, domestic hot rolled sheets stand at around €700-710/t ex-works. Those service centres trying to sell at €730-740/t will lose orders. Pickled sheets are at €730-740/t. The proposed level of €750/t has been refused by buyers. Service centres now receiving arrivals of HRC paid €680-700/t delivered on average, the prices at the beginning of March. With the current sheet levels they are losing money.
In a previous interview this week, another service centre said demand should continue to improve for about a month “before gaining confidence and refusing customers’ low bids, and then think about increasing our prices.”
Natalia Capra France
