Standoff between European HRC buyers and mills continues

Trading activity remained limited in the European hot-rolled coil market Feb. 16 as mills insisted on higher prices and buyers resisted the increases because of an uncertain market outlook.

Platts assessed domestic hot-rolled coil prices in Northwest Europe stable day on day at Eur785/mt ex-works Ruhr.

Offers have been reported at the equivalent of Eur780-800/mt ex-works Ruhr and Northwest Europe. Market participants estimated tradable values at Eur780-800/mt ex-works Ruhr. Bids have been heard at Eur750/mt ex-works Ruhr. One source also reported unconfirmed deals at Eur750-755/mt ex-works Northwest Europe.

European steelmakers have been offering late April-May rolling HRC. The full order books have been the key driver behind the mills’ bullish approach.

Some buyers, however, questioned the producers’ claims and believed that they would be able to get earlier production in case of firm bid.

Lack of competitive import offers and high production costs have also contributed to the domestic coil price rise.

“Mills say that they have enough volumes sold, and you can either accept the offer price or leave it,” a service center source said.

Distributors have been struggling to transfer price rises for new production coil to their customers.

“End-users are not ready to accept higher prices,” a European distributor said. “The mills face high energy and other costs, and the price rise is justifiable, but end-users set the mood in the market. If they do not accept higher prices, a price increase is unlikely.”

In addition, buyers have been concerned that the end-user demand has not been strong enough to support higher prices.

As a result, buyers have been making deals only for smaller lots of coil to fill gaps in their stocks.

Also, some market participants were expecting prices to decline in the second half of the year.

Platts assessed domestic hot-rolled coil prices in South Europe at Eur770/mt ex-works Italy Feb. 16, stable day on day.

A deal was heard at Eur770/mt ex-works Italy. Tradable values have been reported at Eur770-780/mt ex-works Italy. An integrated mill from the north of Italy has been offering HRC to Northwest Europe at Eur850/mt delivered, making it the equivalent of Eur790-800/mt ex-works Italy.

Volumes available from Italian mills have been limited, as a producer from the south of the country had no volumes to offer, a mill in the north has been focused on sales of downstream coil, and rerollers had reduced availability.

Platts is part of S&P Global Commodity Insights.

— Maria Tanatar