Italian coil market goes quiet following increases

Italian coil prices are set to increase again as producers are either communicating increases or not quoting at all.

The news that ArcelorMittal – as well as other major suppliers – have raised European coil offers yet again has frozen purchases in Italy. Buyers believe this to be “too strong an acceleration”, following the round of increases just before the winter holiday break.

ArcelorMittal is now reported to be offering hot rolled coil in Italy at €800/tonne ($876) base delivered for March shipment, up some €60/t compared with offers registered in December at €740/t base delivered. Hot-dip galvanized coil is offered at €920/t base delivered in Italy.

Other domestic producers are considering a similar level of offers. The move is being supported by the fact that long-term negotiations for coil supply to the automotive sector advanced positively in the final weeks of last year (see Kallanish 10 January).

Service centres, perplexed by the further hike, tell Kallanish they are now considering alternative sources of procurement. Buying from the import market is however difficult as buyers are expected to pay in January up to a 7% safeguard duty on HRC and 9% on HDG to clear material through customs after EU safeguard quotas were exhausted.

The duty on HRC equates to around €40/t additional cost, which makes purchases from the import market too risky. Traditional suppliers of quality HRC such as Vietnam, Taiwan, Japan and Egypt are expected to sell less in Italy in the coming weeks. An allocation of Indian material was still available at the beginning of the week at €650/t cfr Italy but depleting extremely fast, while Turkish material is expensive.

However, despite the €40/t cost, some sources believe purchasing on the import market remains an option as the gap between imported and domestic material would remain wide enough if HRC transactions reach $800/t base delivered.

In the Italian domestic market, several sources indicate €720-730/t base delivered as an achieved transaction price. The strong offer increases have caused purchasing activity to go quiet this week. However, both re-rollers and service centres will be in need of purchasing material soon, with no other option in the short term than to buy domestically. For the moment, some buyers intend to destock. Several service centres agree they will have to be united and unflinching in increasing their coil derivative prices.

Natalia Capra France