Returning auto demand lifts sentiment in European coils market

The European hot-rolled steel coils market remained firm Sept. 10, with returning automotive demand and extending lead-times expected to support prices, sources told S&P Global Platts.

The Platts TSI hot-rolled coil index was calculated Sept. 10 at Eur476/mt ($565.34/mt) ex-works Ruhr, unchanged on the day at its highest mark since March 25.

Cold-rolled coil gained Eur1.50/mt from Sept. 9 and was assessed at Eur532.50/mt ex-works Ruhr, a level last seen on April 23.

In Southern Europe, HRC added Eur0.50/mt on the day and was assessed at Eur471.50/mt ex-works South Europe, the highest since July 10 2019.

A Benelux-based trader said sentiment in the market was more positive after the recent price hikes from mills, with mill order books from the automotive industry “a lot better,” despite the fact that car sales were somewhat “contradictory.”

“Car sales in August were still 10-15% below that of the previous year, but the forecast for demand is much better. Mills are happy because their order books are filled until the end of the year for the automotive sector,” the trader said.

The same source however was unsure what the drop in iron ore prices would entail, as this is correlated to crude oil prices.

“Iron ore prices have come down and oil prices decreased by 10% in the last week, so this will have some effect, as when oil decreases, it suggests an economic slowdown,” the same trading source warned.

Platts assessed its IODEX 62% iron ore index at $126.30/dmt CFR North China Sept. 10, down $0.90/dmt on day. Firm demand from Asian steel producers saw the IODEX assessment reach $130.80/dmt on Sept. 3, its highest mark since January 2014.

The trader also said mills were planning to increase capacity, which would mitigate the longer lead times of 10-12 weeks currently present in the market.

“We missed some business because we were a little too high in our pricing, and lead times are so long, so it’s not been easy,” the trader lamented.

According to the source, 20 blast furnaces are scheduled to restart during the middle of September.

An Italy-based service center source said he was now bullish for the market with HRC increasingly likely to reach Eur500/mt EXW Italy in the short term.

“Everything is moving so rapidly, every day offers are withdrawn and then increased the next day by another Eur10 and imports are not a viable option so higher prices have to be accepted by the buyers,” he said.

“As a buyer myself I can see it is becoming difficult to source anything other than domestic material – stocks in the market are low and service centers have to buy every day.” Order intake in September has started well with better-than-expected August and July demand further reducing inventories at Italian service centers.

Continued strength in Asian markets is expected and this will support the recovery in Europe, the source said, adding, ” We could easily reach Eur500/mt for HRC in Italy if China continues to consume.”

— Len Griffin, Amanda Flint