Limited availability, improved buying support HRC price rise in Europe despite still-slow consumption

European hot-rolled coil prices moved up on restocking activity and limited availability on Wednesday January 18, but market sources questioned the viability of further rises, Fastmarkets has heard.
Fastmarkets calculated its daily steel hot-rolled coil index, domestic, exw Northern Europe at €729.17 ($788.57) per tonne on Wednesday, up by €13.75 per tonne from €715.42 per tonne on Tuesday.

The latest calculation of the index was up by €22.92 per tonne week on week and by €84.38 per tonne month on month.

Market sources said that the apparent demand for HRC was picking up due to restocking activity, but that real steel demand was still subdued.

“There’s a bit of a wait-and-see attitude in the market now, while buyers are digesting higher prices. But consumption [of HRC] is stable at low levels,” a distributor told Fastmarkets.

Most European mills were said to be sold out for March-delivery coil and had yet to announce prices for April delivery, with most sources expecting a rise.

“This week, most of the big producers are out of the market,” a steel-service center in the region said. “Mills have comfortable order books [for HRC]. They are likely to announce another €20-30 per tonne increase and let buyers think it over.”

Transactions in the region were reported at €730 per tonne ex-works on Wednesday, with tradeable values estimated by buyers at €710-730 per tonne ex-works.

A Nordic mill’s latest offer of HRC to Germany was heard at €760 per tonne delivered for March delivery, but the producer was reported to have sold out its March volumes and had yet to table new offers.

An offer from an Italian mill was reported by two trading sources at €750 per tonne delivered to Germany, with some bookings reported at this level earlier in the week.

In general, sources expected to see offers for April-delivery HRC about €30 per tonne higher compared with March deliveries.

Alternatively, several trading sources expressed doubts about the sustainability of the acute uptrend in prices.

“The price rise [for HRC] is driven by output cuts and some restocking. But we do not see real steel demand picking up,” a second steel-service center in the region said. “Our customers in the automotive industry are largely holding back from bookings now.”

Another trading source even suggested that the current HRC deals “could be the peak for HRC prices in [the first half of] 2023.”

Fastmarkets’ calculation of its daily steel hot-rolled coil index, domestic, exw Italy was €723.09 per tonne on Wednesday, up by €16.42 per tonne from €706.67 per tonne on Tuesday.

The latest calculation of the index was up by €28.26 per tonne week on week and by €84.76 per tonne month on month.

Offers from two domestic integrated mills were heard at €750 per tonne ex-works on Wednesday.

But one of these mills indicated a new target price for HRC of €800-830 per tonne ex-works for April delivery. And an offer from a re-roller was heard at €760-770 per tonne ex-works.

Buying interest at these prices was quite limited, however, sources said.

Transactions in Italy were still being reported at lower levels around €720-730 per tonne ex-works, sources said.

Meanwhile, overseas HRC offers to Italy were heard at €695-700 per tonne CFR from Japan and South Korea for March-April shipments.

And Turkish HRC was offered to Italy at €740 per tonne CFR.

European buyers did not consider those prices workable due to the long delivery terms. In fact, buyers’ price ideas did not exceed €660 per tonne CFR Italy, sources said. This was considered too low by the sellers, however.

One mill source told Fastmarkets: “We expect European buyers to accept HRC prices of at least €685 per tonne CFR.”

Published by: Julia Bolotova