Italian HRC prices likely to increase

A coil producer in Italy is temporarily suspending sales this week and considering potential price increases for September delivery.

Price increases for hot rolled coil have been expected since the European Commission proposed in late May to extend the EU safeguard measure on steel by a further two years. This was confirmed this week (see Kallanish passim). It will also introduce a 15% cap per origin over the “other country” HRC tariff-rate quota. The hikes, however, have not yet materialised in contracts due to the poor consumption downstream, Kallanish notes.

Other steelmakers are also considering price increases but have been discouraged by the low consumption seen across end-use sectors and service centres. Interest in importing material is limited. Turkey seems to be the most dependable source but there is a perceived quality issue for service centres.

Quotas for several Asian suppliers have been fully utilised, and the remaining quotas from certain countries are depleting rapidly. Import contracts are few and priced at an average of €600/tonne ($640) cfr Italy, while domestic material remains steady at an average of €620-630/t base ex-works or delivered, sources suggest.

There are expectations in the Italian flat steel market for potential increases in coil, tube and sheet prices, following the renewal of safeguard quotas from 1 July (see separate article).

“There is a sense of unease among buyers and uncertainty among Asian producers when it comes to quotas,” an importer of Asian HRC into Italy says. “Importing is becoming increasingly difficult, which will undoubtedly result in an increase in prices in the medium term. Numerous service centres and re-rollers will not clear material through customs due to its exorbitant cost. Changes in the geography of imports will occur.”

Another source expects Italian HRC values to increase by possibly €20/t. The absence of imports, the volume of HRC that will not be cleared through customs, and the extended domestic mill production stoppages this summer will result in a scarcity of material. Multiple producers have confirmed they are contemplating extended maintenance shutdowns this August in order to maintain a balance between supply and demand.

Natalia Capra France

kallanish.com