Restocking, reduced availability push up European HRC prices

A lack of supplies and a pick-up in trading pushed up European hot-rolled coil prices on Thursday November 23, with restocking gaining pace in Italy, while Northern Europe lagged behind, sources told Fastmarkets.

The main driver of rising HRC prices in Europe was the lack of supply, both domestically and from imports, sources said.

But despite the still-weak consumption, the mood in the flat steel market was becoming more optimistic, with local producers actively pushing for price increases.

In Italy, local mills were asking for €670-680 ($730-741) per tonne delivered (equivalent to about €655-665 per tonne ex-works) for HRC to be delivered in January or February.

Sources confirmed that several deals have already been agreed at the new prices this week.

“Increases have been paid so far, because buyers do not have much option,” a trading source in Italy said.

“Importing was [previously] an alternative, but not anymore — [mainly because] lead times are too long and because safeguards make it even more complicated. And in Europe, mills have trimmed [their output], so [HRC] prices are rising regardless of the slow consumption.”

In Southern Europe, Fastmarkets calculated its daily steel hot-rolled coil index, domestic, exw Italy, at €659.38 per tonne on November 23, up by €20.00 per tonne from €639.38 per tonne the previous day.

The index was up by €26.05 per tonne week on week and by €56.88 per tonne month on month.

Import offers from Asia came in at around €620-640 per tonne CFR, for January-February shipment, sources told Fastmarkets.

Market participants agreed that imports from Asia were “totally not possible” because of rising prices and complications with customs clearance arising from the EU’s import safeguards.

“If you book something today from, say, Vietnam, it will arrive at the end of March,” a buyer source in Italy said.

“The new [quarterly EU import] quota period starts on April 1, but it is highly unlikely that it will be possible to squeeze those volumes into the second-quarter allocation, so there is a chance you would have to wait until July 1 for customs to clear that cargo,” the buyer source added. “That’s an impossible risk.”

Sources indicated that European ports still have quite significant tonnages of imported coil that did not fit the allocation to be customs-cleared in the first quarter of 2023, so they expect the “other countries” allocation for the first quarter of 2024 to be quickly filled with this material.

Offers of December-shipment HRC from Turkey were heard at €660 per tonne CFR, including the anti-dumping duty.

And sales of India-origin HRC to Italy were heard at €640 per tonne CFR last week.

In Northern Europe, meanwhile, trading was slower than in Italy, but higher prices have been achieved in deals for HRC, with lead times of six to eight weeks.

Sales of limited tonnages were heard at €650-670 per tonne ex-works in the region, with offers reported at €680-700 per tonne ex-works.

Italy-origin coil with lead times in January was offered to Germany at €680-770 per tonne delivered.

Fastmarkets calculated its daily steel hot-rolled coil index, domestic, exw Northern Europe, at €665.21 per tonne on November 23, up by €5.46 per tonne compared with €659.75 per tonne on November 22.

The index was up by €9.54 per tonne week on week and by €55.21 per tonne month on month.

The recent upturn in demand was mainly due to restocking in the region.

“Distributors and steel service centers are sending in specifications because they have to restock,” a steel service center in the region said. “The increased activity is not economy-driven, but more out of fear of higher prices and longer lead times from domestic mills due to capacity reductions.”

A new round of price rises by European mills was expected to be announced before the seasonal Christmas break, several market sources said, with new offers “likely to be above €700 per tonne ex-works.”

“Mills are negotiating €750 [per tonne] for first-half 2024 contracts with end users,” a distributor in Northern Europe said, “so they are trying to bring spot prices into line with this.”

Published by: Julia Bolotova