Some HRC producers in Europe start pushing offers up; buyers hold back

Some European producers of steel hot-rolled coil were seeking to achieve higher prices, but buyers were still unconvinced about any substantial price increases given the slow demand from end users, Fastmarkets heard on Wednesday August 23.

Several sources told Fastmarkets that a leading European steelmaker had increased its offer for October-rolling HRC to €700 ($762) per tonne ex-works.

According to buyers, this was about €20 per tonne above the previous official offers from the mill and substantially higher than the current workable price in the spot market.

In addition, trading sources pointed out that new offer price “might not be the same across all regions [in Europe].”

“Demand is still quite slow, [there are] few suppliers, buyers active. We will see a bit more clarity on price direction [from Monday August 28],” a distributor in the Benelux region said.

Market sources expected other steelmakers to follow the move and push offer prices to a similar level to €700 per tonne ex-works.

Buyers’ estimates of achievable prices for HRC in Northern Europe were around €630-650 per tonne ex-works, however.

Most buyers considered offer prices at €700 per tonne ex-works too high because of the slow consumption and the inability to pass higher costs downstream.

“We need to increase prices to end users first, but they are actually asking for discounts,” a trading source in Germany said. “And starting from October, the European market will be flooded by cheaper imports.”

One German mill was reported to be sold out for the rest of the year, but this was not widely confirmed by market sources.

Fastmarkets calculated its daily steel hot-rolled coil index domestic, exw Northern Europe at €642.71 ($699.20) per tonne on Wednesday, up by €7.71 per tonne from €635.00 per tonne the previous day.

The index was also up by €5.63 per tonne week on week but down by €13.54 per tonne month on month.

Fastmarkets’ calculation of its corresponding daily steel hot-rolled coil index domestic, exw Italy was €633.33 per tonne on Tuesday, up by €5.83 per tonne from €627.50 per tonne the previous day.

The Italy index was up by €0.83 per tonne week on week, but down by €5.00 per tonne month on month.

Italian producers were still out of the market for seasonal holidays, but they were also expected to push offers up to around €700 per tonne ex-works after their summer break, market participants said.

Sources also said that slow consumption would be the main obstacle to significant HRC price rises in Europe.

“We expect restocking activity to support some limited [HRC] price rises, but [any demand] rebound will not be strong enough to drive massive price rises,” a trading source in Italy said.

Meanwhile, Italian buyers’ estimates of achievable prices were around €630-650 per tonne ex-works.

Import HRC offers to Europe were limited.

The “other countries” quota allocation allowed by the European Union for imports in the third quarter was entirely taken up before the end of July, which meant that the high number of Asia-origin HRC cargoes coming into the EU in August-September would not be customs-cleared until October 1, when the new quarter will start.

South Korea has also fully used its individual third-quarter allocation for imports.

Vietnam, Japan, Taiwan and Egypt were the major HRC suppliers to the EU under the “other countries” category, with Asian suppliers offering the most competitive prices, according to EU market sources.

Currently, those suppliers are able to offer HRC with November-December delivery to Europe, which was not suitable for EU buyers, given the high safeguards-related risks.

Published by: Julia Bolotova