European traders have in recent weeks noticed very little interest from buyers to make new orders of hot rolled coil from non-EU suppliers. This is due to uncompetitive offers, as well as expectations that new safeguard quota availability will be very limited in the fourth quarter of 2023 and Q1 2024.
Currently, traders in southern Europe are reporting offers at €605-645/tonne ($640-680/t) cfr for HRC. These levels are considered uncompetitive by buyers, who are preferring to destock available material rather than order new import volumes.
“We are in a situation similar to the second half of 2019,” a trader tells Kallanish. “Nobody wants to buy and the high interest rates are hitting sentiment even further.”
In addition to prices, buyers are reluctant to place new orders as they are aware that quotas for most Asian import sources as well as Egypt are expected to be rapidly used in Q4 2023 and Q1 2024.
During Q3, import quotas for South Korean HRC have been fully utilised, similarly to those for the “other countries” sub-group, which includes Egypt and Japan. Indian quotas this quarter have been 80% utilised, but traders believe that in Q1 2024, these will be fully utilised, based on orders already placed in recent months.
Only 40% of Q3 quotas assigned to Turkey for HRC have been used, but duties continue making Turkish offers uncompetitive for European markets, Kallanish understands.
“I don’t expect importers to restart ordering HRC before November this year,” another trader comments.
Emanuele Norsa Italy