Sentiment largely negative in European HRC market despite supply issues

Sentiment in the European hot-rolled coil market was largely negative on Wednesday April 19 despite reduced supply, with activity remaining limited due to good order books at mills and sufficient stocks among buyers, sources told Fastmarkets.
Fastmarkets calculated its daily steel hot-rolled coil index, domestic, exw Northern Europe at €842.50 ($923.20) per tonne on Wednesday, down by €4.13 per tonne from €846.63 per tonne on Tuesday.

The index was down by €12.50 per tonne week on week, and down by €3.75 per tonne month on month.

The index was based on market sources’ estimations of achievable levels at €830-850 per tonne EXW. Transactions were rare because most major suppliers were staying out of the market and not giving firm offers for HRC, citing full order books.

“Most mills don’t offer, saying they are fully booked. I think the main cause for this are the production problems with ArcelorMittal in France and Spain in combination with maintenance in Poland, plus the disruption in production at Tata Steel Ijmuiden,” a trading source in the region said.

“Mills will try to maintain actual levels, but as lead times are getting longer it will be more interesting to buy cheaper imports,” the trading source added.

Pickled and oiled HRC of Italian origin with June delivery was offered to Germany at €870 per tonne delivered, with transactions reported at this level, but for small volumes.

Buyers had sufficient stocks and therefore were also largely inactive, given “disappointing demand from the end-user side,” sources said.

Sources pointed out that the recent uptick in automotive demand might not be sustainable.

“Production figures for the automotive industry are improving indeed, but at the same time subcontractors are desperately looking for alternatives [of HRC supply] because of supply disruptions,” a second trading source said.

Fastmarkets calculated its corresponding daily steel hot-rolled coil index, domestic, exw Italy at €841.00 per tonne on Wednesday, down by €4.00 per tonne from €845.00 per tonne on Tuesday.

The index was down by €9.00 per tonne week on week, but up by €23.75 per tonne month on month.

Offer prices from local suppliers were reported at €840-860 per tonne EXW, according to sources, but €830 per tonne EXW was achievable for bigger tonnages, they said.

But local buyers were shifting their focus to imports, given that the gap between domestic prices has stretched to more than €100 per tonne recently.

Notably, sources said that India-origin HRC was available at €690-700 per tonne CFR for large tonnages—i.e., 20,000 tonnes and more.

A Japanese supplier has reduced its offers from the $830 per tonne voiced last week for June shipment coil, to $810 per tonne CFR this week. But several sources reported sales at an even lower level—$780 per tonne CFR. This, however, was not confirmed by the seller.

Several sources have also reported HRC offers from Vietnamese suppliers at around $687-692 per tonne CFR, but it was not widely confirmed by all market participants, including the suppliers.

Published by: Julia Bolotova