European hot-rolled coil prices were broadly stable on Friday June 27, amid tepid demand, but the overall weekly decline means prices are now close to “rock bottom” and further falls are unlikely because costs are increasing, producer sources told Fastmarkets.
“I don’t think [HRC] prices will keep sliding down at the same pace. The decline is already slowing [and the] order books situation is not too bad ,” a mill source said.
One mill source estimated the market level at €580 per tonne ex-works, but most market participants – including suppliers – indicated that lower prices were achievable, with some indicating that €550-570 per tonne ex-works was a workable level.
At the same time, suppliers said that for integrated mills €550 per tonne ex-works was “unacceptable.”
“You can get €550 [per tonne ex-works] only from rerollers,” a second mill source said, who also reported a transaction at €570 per tonne ex-works for a small tonnage.
Fastmarkets’ calculation of the daily steel hot-rolled coil index domestic, exw Northern Europe was €565.63 per tonne on June 27, down by just €0.62 per tonne from €566.25 per tonne on Thursday.
But the Northern European index was down by €14.55 per tonne week on week and by €62.94 per tonne month on month and Friday’s calculation puts the index at its lowest level since January 9.
Market participants were split over the likely direction of prices, however.
Sellers sources told Fastmarkets they were certain that the bottom has already been reached, given the current input costs.
“We can’t reduce [HRC] prices any more – otherwise, we will have to shut down production,” a second supplier source said.
A third supplier source said that prices had been “unjustifiably” high in April and early May and that some suppliers were stuck with “unrealistic” offers for far too long, which resulted in gaps in order books and aggressive sales later in May and into June.
“One of the drivers of the HRC price decline [in the past few weeks] was the aggressive sales policy of [one major Europe supplier]. However, [that supplier has now] closed its July-August order book and has withdrawn from the market,” the third supplier source said.
“We have quiet summer months ahead and, hopefully, will see some kind of rebound in autumn, due to restocking and lower demand for imports [ahead of the upcoming CBAM [regulations],” the source added.
Meanwhile, domestic hot-rolled coil prices in Central Europe fell in the week to Wednesday, with muted demand and competitive imports affecting the market, sources told Fastmarkets.
Offers from suppliers in Central Europe were heard hovering around €590-600 per tonne ex-works through the week, compared to €620-640 per tonne ex-works heard in early June.
Sources attributed the drop in prices to weak demand and primarily to cheap imports from Asia, and especially from Indonesia, where HRC offers have been heard at €470-480 per tonne CIF.
According to a producer source, Indonesian imports have caused “significant disruption” in Central Europe with their “low-priced deals”, while also citing rumours alluding to possible additional drops in prices.
A second producer source said that current levels are at “the bottom of the market, or close to it,” although they added that the exchange rate was “changing in favor of imports,” which is also affecting prices.
Meanwhile, a distributor source said the price trend was down to “reduced demand.”
Fastmarkets’ weekly price assessment for steel hot-rolled coil domestic, exw Central Europe, was €590-600 per tonne on Wednesday, June 25, falling from €600-630 the previous week.
Fastmarkets’ daily steel hot-rolled coil index domestic, exw Italy was calculated at €540.42 per tonne on Friday, down by just €0.21 per tonne day on day.
But the Italian index was down by €26.25 per tonne week on week and by €60.83 per tonne month on month.
In Italy, local suppliers were offering HRC with August lead times at around €560-570 per tonne delivered, which nets back to €550-560 per tonne ex-works.
But estimates of achievable prices were lower, at around €530–550 per tonne ex-works.
Notably, several sources said, that small-sized tonnages – of below 1,000 tonnes – were available at €540-550 per tonne or slightly higher, while larger volumes could be traded at €530-540 per tonne ex-works.
“I don’t see big tonnages [of HRC] being traded at prices higher than 530-540 per tonne ex-works,” a source in the Italian market said.
In the secondary market, 4 mm HR sheet was traded at €640-660 per tonne CPT, Fastmarkets understands, which is lower than the deals done at €660-680 per tonne CPT in the first half of June. Offers were broadly unchanged in the week to Friday.
August-shipment HRC from Indonesia, meanwhile, was on offer at €470-480 per tonne CFR Italy, sources said.
And Turkish HRC was on offer to Italy at around €525-530 per tonne CFR, including the import duty – although some market participants indicated that larger tonnages of HRC from Turkey could be available at prices as low as €500-510 per tonne CFR, duty paid.
One source also reported that HRC from Saudi Arabia was on offer at €500-510 per tonne CFR to Italy, and HRC from Vietnam and Thailand was on offer at €510-515 per tonne CFR.
