Italian HRC producers seek higher prices, but buyers hold back

Producers of steel hot-rolled coil in Italy were pushing for higher prices but buyers were reluctant to accept increases, citing slow downstream sales, Fastmarkets heard on Tuesday July 4.Italian producers have increased their offer prices for August-September delivery coil, some of them by as much as by €50 ($55) per tonne, but these increases have not been consolidated in deals so far.

Offers from one integrated mill in the country were heard at €700 per tonne CPT (around €680 per tonne ex-works), while another integrated producer was aiming even higher, asking for €730 per tonne CPT (around €700 per tonne ex-works).

Offers from re-rollers were reported around €680-700 per tonne ex-works. But most buyers estimated a workable value at €640-650 per tonne ex-works, citing slow demand.

“We are trying to increase prices to our customers, but it might take us a couple of weeks to consolidate [these],” a steel-service center source told Fastmarkets. “[HRC] prices have been falling for quite a long time. Until recently, cut-to-length HR sheet was sold at €700 per tonne CPT in Italy.”

Fastmarkets calculated its daily steel hot-rolled coil index, domestic, exw Italy, at €657.92 per tonne on Tuesday, up by €7.92 per tonne from €650.00 per tonne on Monday.

The Italian index was also up by €11.93 per tonne week on week, although it was down by €22.08 per tonne month on month.

Import HRC prices have been stabilizing recently, with some suppliers looking for small rises of about €10-20 per tonne. Interest in overseas bookings has been limited recently due to stretched lead times. August-shipment material was sold out at most mills, while new offers were mainly for September-October shipments, which would mean November-December arrivals.

An HRC offer from Japan was reported at €630 per tonne CFR for September shipment, while smaller-volume transactions were reported at €620 per tonne CFR to Italy.

October-shipment HRC of Indian origin was offered to Italy at €600 per tonne. And a Vietnamese mill was offering €610 per tonne CFR for September-shipment HRC to Italy.

South Korean suppliers were out of the market. According to market participants, suppliers might have exceeded their quota volumes for the next quarter and therefore were not active.

Meanwhile, Fastmarkets’ daily steel hot-rolled coil index, domestic, exw Northern Europe, was calculated at €681.46 per tonne on Tuesday, up by €1.46 per tonne from €680.00 per tonne on Monday.

The latest calculation of the Northern European index was also up by €9.46 per tonne week on week but was down by €55.62 per tonne month on month.

Firm offers were rare in the region, with most integrated mills taking a “case by case” approach.

Buyers’ estimates of tradeable values were heard between €670 and €700 per tonne ex-works, with transactions for smaller tonnages reported at €670-680 per tonne ex-works.

Some sources suggested that producers would follow the Italian mills and try to increase prices in the spot market, especially given the outcome of long-term contract negotiations.

“Contracts [for the second half of the year] with automotive [manufacturers] were settled at €800 per tonne, similar to first-half levels. But this is significantly above the current spot market, so a logical step for the mills would be to push for a rise,” a distributor said.

But buyers doubted the likely success of such a move, given the slow demand from end-users.

“It would make sense for mills to take small steps [in terms of price rises],” a second steel-service center source said. “Market conditions are not good for a massive price rise. Maybe some upward correction would be possible during July restocking, but that’s all.”

Most sources agreed, however, that HRC prices were unlikely to decline, so a rollover or an upward correction were equally possible for July.

Published by: Julia Bolotova