Lack of end-user demand remains major concern for European HRC market

The European market for steel hot-rolled coil was slowly restarting after summer holidays, but a strong rebound in September was seen to be unlikely because of a lack of real steel demand, industry sources told Fastmarkets on Wednesday August 30.

European mills were making attempts to consolidate prices for HRC around €700 ($759) per tonne ex-works, but no such price was achieved in deals because the majority of buyers considered it to be unworkable.

“Demand is still very low, from practically all [end-user] sectors, so major price rises are unrealistic,” a trading source in Germany said.

“From the customer side, the demand is not there,” a second trader said, “so we do not believe that €700 [per tonne ex-works for HRC] is realistic.”

But at the same time, stock levels were quite low among distributors and steel service centers, so restocking could prompt some price upticks for HRC during September.

“Maybe restocking will allow a price increase [for HRC] of as much as €15-20 per tonne to be achieved during September, but the question is whether the increase will be sustainable in the fourth quarter – we will see,” a trading source in the Benelux area told Fastmarkets.

Most mills in Europe could still offer October-delivery coil, which indicated weak order books, sources said.

One German mill was reported to be hoping to get €700 per tonne ex-works for November-rolling coil, while another German mill was reported to be out of the market.

A major integrated producer in Northern Europe was selling limited tonnages of HRC for October delivery at €650-670 per tonne ex-works, but was hoping to increase offers for November-December, because otherwise sales would be loss-making, Fastmarkets heard.

As a result, Fastmarkets calculated its daily steel hot-rolled coil index, domestic, exw Northern Europe, at €650.21 ($704.69) per tonne on August 30, down by just €0.18 per tonne from the previous calculation of €650.39 per tonne on August 29.

The index was up by €7.50 per tonne week on week but down by €5.79 per tonne month on month.

Fastmarkets’ calculation of its corresponding daily steel hot-rolled coil index, domestic, exw Italy, was €635.83 per tonne on Wednesday, up by €0.41 per tonne from €635.42 per tonne on August 29.

The Italy index was up by €2.50 per tonne week on week, but down by €8.75 per tonne month on month.

Italian steelmakers also had bullish intentions, with price ideas still reported at €700 per tonne delivered (about €680-685 per tonne ex-works).

The market in Italy was expected to fully restart in the week beginning September 4, when market sources expected to see a clearer price direction.

Buyers were still estimating tradeable values no higher than €630-650 per tonne ex-works, citing insufficient demand from end-users.

“The market [for HRC] is still silent this week [starting August 28]. We will see more activity from buyers at the beginning of September,” a trading source in Italy said.

Import HRC options remained limited for European buyers due to inconvenient lead times (late November or early December), safeguarding risks and high prices.

“I heard that a lot of traders have problems with the [EU quarterly import] quotas, so a lot of them are trying to move to January [delivery],” a trader in Europe said.

A supplier from Taiwan was offering December-delivery HRC at €620 per tonne CFR to Antwerp, while a Turkish mill was offering October- or November-delivery HRC at €640 per tonne CFR to Antwerp.

A mill in South Korea was offering December-delivery HRC to Italy at €625 per tonne CFR.

And one Indian supplier was offering limited volumes of base-grade HRC with November-December delivery at €600 per tonne CFR to Italy.

Published by: Julia Bolotova