Some European steelmakers are mulling increases on hot rolled coil, since the European Commission said it will introduce a 15% cap per origin over the “other country” tariff-rate quota (TRQ) for HRC.
The HRC market remains stagnant in Europe. Before the Commission announcement and considering the very weak consumption for coil and its derivatives downstream, EU steelmakers were bracing for a circa €20/tonne ($21) price decline in June. The latest EU move will further discourage imports from third countries and will leave buyers with no other option but to buy domestic material, sources tell Kallanish.
Steelmakers believe June prices will rebound in Europe by up to €50/t, as stocks are particularly low. Marcegaglia chairman Antonio Marcegaglia told Kallanish on the sidelines of the Danieli event in Udine last week that international coil prices may increase towards the end of the second quarter or beginning of Q3. “Final demand for coils at an international level is rather static. Some consumption rebound is expected but I believe it will be more of a technical restocking thanks to some improved confidence in the relative price stability,” he noted.
The Commission says the surge in imports from certain new origins is related to growing overcapacity in certain regions, as well as to the significant pressure exerted by a strong increase in Chinese exports to certain markets. The TRQ amendment was made after the HRC other country quota was exhausted on the first day of the quarter for several consecutive quarters (see separate article).
HRC prices are stable compared to the beginning of May, with trade limited and confidence on the side of buyers lacking, several sources confirm. Transactions range from €630-640/t base ex-works in Europe, or €650/t base delivered as quoted by a large producer. Price increase announcements are expected in the coming days but the market remains fragile and the hikes are expected to be moderate.
Natalia Capra France
