Northern European HRC market stirs as prices see greater acceptance from buyers

Market participants reported increased acceptance from Northern European buyers to lower hot-rolled coil pricing as mills mulled production cuts on reduced demand and high input costs.

Platts assessed HRC in Northern Europe at Eur1,150/mt ex-works Ruhr May 16, stable on the day. In the South, the HRC price fell Eur15/mt to Eur1,050/mt ex-works Italy.

In Northern Europe, market participants held more clarity as to tradable levels with deals reported from several sources.

Multiple traders confirmed deals heard at Eur1,150/mt ex-works Ruhr with an offer heard at Eur1,200/mt ex-works. A service center source also reported the trades, speculating prices as low as Eur1,100/mt ex-works as achievable in the near term due to gaps in mill orderbooks.

“I think, on average automotive demand went down by around 20%, so the mills should have more HRC and other flat steel available,” a Dutch service center source said. “We heard that automotive negotiations have started, but I think prices will reduce significantly in the coming months – either that or mills drastically reduce production.”

A German trader source shared the sentiment, seeing demand as reduced into the mid-term, with buyers waiting for prices to stabilize at lower levels.

“It’s clear, producers are keen to sell and are looking for orders. The longer the customers wait, the cheaper the price will be – the only chance to stop the cycle is to cut production,” the source said.

A similar aversion to purchasing was heard in the import market, with offers heard on the day at Eur940-960/mt CIF Antwerp.

Buyers were heard using competitive import levels in negotiations with the EU mills, but non-EU booking remained scarce due to long lead times and logistical risks.

“With delivery times hitting August-September, buyers simply won’t order in expectation of lower and lower prices – restocking has not started yet,” another trader said.

The source disagreed with other sources’ stances on price direction, seeing “no real reason why the price should fall any further”.

Raw material prices are high, energy costs are tremendously high, and inflation is already at 7.50%.”

In South Europe, offers were heard at Eur1,150/mt and Eur1,050/mt ex-works Italy.

A distributor source cited achievable prices at Eur1,050/mt ex-works Italy, seeing a negative sentiment in the market with prices to potentially decrease as far as pre-war levels when prices were in the Eur800-900/mt range.

Import offers were heard in a range of Eur900-950/mt CFR Italian ports. However, with lead times now extending into October, a trader source reported minimal interest from buyers.

The source expected buyers to return to the market in late May-early June, saying service center buyers would be particularly prudent in purchasing given strong profits realized in recent months.

According to the trader, service center costs were covered as far end of the year, with relevant buyers unwilling to take any risks in the current geopolitical climate.

— Benjamin Steven, Maria Tanatar