North European hot-rolled coil prices fell over the past week, as some mills cut their prices to move tonnes in a very quiet demand environment.
Activity across the continent is very quiet, amid the holiday season. Parts of north Europe are yet to return, while southern European participants typically take much of August off.
This seasonal quietness is, as usual, sparking fears over the health of demand, both from intermediaries and end buyers. Economic weakness in Germany, which is underperforming the wider Eurozone in terms of manufacturing and construction activity, is further dampening sentiment.
One large producer has taken a scythe to its contractual offers. After securing July-December volumes close to €800/t with northern buyers in recent months, it has started to offer additional volumes closer to €600/t to move surplus tonnages – this is below prevailing spot prices, whereas the initial accords were at a steep premium.
Mills trying to commit more contractual tonnages at such import-busting prices suggests they do not hold a firm outlook for spot prices in the coming quarter, despite the potential restocking that could occur in September – buyers have largely been absence from the spot market since the second quarter, after an earlier restock in the December-March period, so they could replenish to an extent after the holidays. That said, there is a lot of material on the ground after a big increase in imports in May, and call-offs from a number of important end-use sectors have reduced. Northern mills have offered to large Iberian buyers as low as €620/t delivered base, normalising below €600/t on an ex-works basis.
Argus’ daily northwest EU HRC index was €622/t on Wednesday 9 August, down €28/t from 2 August. The Italian market has been much calmer, with holidays in full swing. Argus’ daily Italian HRC index was €631.75/t on 9 August, down €2/t over the same period.