Italian HRC falls but end-use demand remains strong

Italian hot rolled coil prices are falling compared to the beginning of August by €50/tonne ($59) on average, market participants tell Kallanish. Prices had peaked in July.

Due to low-priced import offers from the CIS region and India, service centres are adopting a wait-and-see attitude. Producers, despite having to accept lower transaction values, remain optimistic about activity, have full order books, and are defending their current asking levels as demand from end-use sectors remains strong.

As HRC delivery stretches to between October and December, sources justify the current price softening as an international “reshaping” of price levels that had reached unsustainably high levels.

Service centres and re-rollers are still not buying from the domestic market as they expect domestic prices to fall further. Their order books however are also well filled and some report lead times into the first quarter of next year.

Italian ports remain congested due in part to arrivals of large tonnages of HRC ordered in June and July when import prices started to decline. Windows of availability for low-tonnage import offers at lower-than-domestic prices are continuing and forecast to remain through September as iron ore and scrap values remain on a downward trend.

Domestic HRC producers are either not quoting or quoting at €1,040-1,070/t base ex-works. These levels will however be hard to achieve in a stagnating market, sources say.

Both Indian and CIS material is offered at as low as €800-830/t cfr Italy. While these prices are challenging for domestic producers, large buyers are shunning these offers as, with import taxes included, values soar to €1,040/t cfr in the case of Indian material.

Domestic material is at €1,070/t for small tonnages and €1,000-1,040/t base ex-works for larger quantities. Sellers lament a “flat, calm” market this week, particularly in the case of service centres.

Natalia Capra France