Italian HRC sales drag on poor downstream consumption

The Italian hot rolled coil market continues to be weak and caught between the high prices of European producers and the weak sales of coil downstream.

Despite the slow demand, steelmakers are quoting lead times of between July and September due to a shortage of material caused by reduced production at Acciaierie d’Italia, ArcelorMittal in France and Spain, and Tata Steel in the Netherlands. Buyers in Italy remain on the fence and, apart from back-to-back purchases, they do not seem to be in need of material, considering the weak demand coming from their customers, Kallanish notes.

Some service centres report continued low activity, which started in mid-February but slowed considerably in April. Others reported a relatively good month of March but “almost zero order intake in April”. No service centre is managing to increase prices in line with high mill HRC values. Restricted supply persists for non-commercial coil grades.

While the European undersupply situation continues, import offer prices are lowering. Asian material is being offered at slightly below €700/tonne ($769) cfr from Japan and Taiwan, and at €700-705/t cfr from other countries, for July boarding. Delivery is in September, the same lead time as offered by certain European mills. However, large consignments of imported HRC are pegged at below €690/t cfr.

According to some buyers in Italy, European producers will have to decrease their prices because downstream demand will continue to drag in May. An end-user says he expects a downward price correction in the second quarter in the domestic market. Italian domestic HRC contracts remain flat on-week at €850-860/t base ex-works, sources suggest.

Natalia Capra France