Northern European HRC closes in on Eur500/mt mark

Northern European hot-rolled coil prices were nearing the Eur500/mt mark Sept. 30 as material tightness leaves little option for buyers than to accept those levels, sources told S&P Global Platts.

Although the distribution sector reported some holding back in purchasing of late, those who need material will have to accept firm offer levels from European mills.

Multiple sources said that EXW Ruhr prices have reached the Eur500/mt level following several rounds of price hike efforts by mills over the past two months, supported by tight material availability and lack of competitive imports. The daily Platts TSI Northern European HRC index increased Eur2.50/mt to Eur498.50/mt Sept. 30.

“Don’t see huge additional upturn, [but it’s] quite a good increase,” a supplier said. “First the stoppages reduced production and second automotive – not suddenly but strongly started ordering, and then in September they got stronger so they needed more material.”

A trading source said there has been some tendency towards a wait-and-see-mode which resulted in temporary price stabilization, but that more increases are likely in mid-November. The source said that inventories across Europe are still low, which will make further purchases necessary for buyers.

Latest figures from German steel stockholder association showed that flat steel stocks rose marginally from July to August to 1.31 million mt. According to the Platts sentiment survey from September, inventories have been predicted to rise slightly, although distributors expected a small decrease.

Material tightness is also apparent in Italy, where HRC prices have been increasing as well, nearing Eur490/mt EXW. Two suppliers have been heard to have delivery problems with lead times lengthening into next year.

“All the main integrated mills are off the market at the moment but we anticipate them coming back to offer for Q1 in the next week or two” said a UK-based source. “This could be timed with the return of the Chinese to the market.”

There have been signs of weakness in the Chinese market with the holiday season approaching, but the UK source expects them to be short-lived.

“As the market is so short of material with extraordinarily long lead times this will continue to have a supporting effect at least on prices and I can only see that prices have more to go in the short term,” the source said.

— Laura Varriale, Amanda Flint