Steel HRC buying improves on restocking in Northern Europe, prices edge higher

The recent upticks in steel hot-rolled coil prices in Europe were supported by restocking, reduced output, and expectations of a new round of increases before the year-end, industry sources told Fastmarkets on Wednesday November 15, but slow consumption remained a concern.

Fastmarkets calculated its daily steel hot-rolled coil index, domestic, exw Northern Europe, at €654.13 ($704.66) per tonne on November 15, up by €1.13 per tonne compared with €653.00 per tonne a day earlier.

The index was up by €9.00 per tonne week on week and by €37.05 per tonne month on month.

On Wednesday, several sources reported a transaction for HRC in Germany at €650-660 per tonne ex-works, for delivery in 6-8 weeks’ time, Fastmarkets heard.

Tradeable values were estimated by buyers at €640-660 per tonne ex-works, with sales at €645 per tonne ex-works for January-delivery HRC reported in the region earlier this week.

Trading activity in Northern Europe has picked up after the Blechexpo trade fair, held in Stuttgart on November 7-10.

“Many buyers have been waiting for the outcome of the Stuttgart fair,” a steel service center in Northern Europe said. “Besides, now is [a good] time for distributors to make orders for first-quarter-delivery coil, because lead times are getting longer, import prices are moving up, and the effect of the [carbon border adjustment mechanism (CBAM)] regulations is not clear but could have consequences for imports in general.”

Official offer prices from integrated mills in the region were still being heard around €680-700 per tonne ex-works, for HRC shipments with lead times of 6-8 weeks.

Market sources suggested that, before holiday stoppages, producers might try to push for another round of price increases for the first quarter of 2024.

“I suggest that mills will push offers above €700 per tonne ex-works starting in December [2023], but it is very uncertain whether customers will accept this,” a trading source in the region said. “[With domestic prices at this level], imports would become attractive again.”

The major concern for both buyers and sellers was the lack of real steel consumption.

“There is no substantial pickup in the market as a consequence of a better economy, so the higher apparent steel demand, driven by restocking now, might be followed by a slowdown in December-January,” another trading source said.

“Mills should keep capacities under control,” a third trader said. “If too many blast furnaces are restarted in the first quarter of 2024, we might see the previous year’s scenario all over again – actively push for higher prices, availability increases, imports become more attractive, European prices collapse.”

Several blast furnaces in Europe have been taken offline in the third and fourth quarters of 2023, with reduced availability one of the factors supporting the recent uptrend in flat steel markets.

But there were now discussions about three or more blast furnaces being brought back online in the fourth quarter of 2023 and the first quarter of 2024, sources told Fastmarkets.

Meanwhile, in Southern Europe, Fastmarkets calculated its daily steel hot-rolled coil index, domestic, exw Italy, at €632.50 per tonne on November 15, up by €2.50 per tonne from €630.00 per tonne on November 14.

The index was up by €11.04 per tonne week on week and by €39.48 per tonne month on month.

In Italy, transactions for coil with six-weeks’ lead times were reported at €640-650 per tonne delivered recently (about €625-635 per tonne ex-works).

Market sources said that the mill’s new price target was likely to be around €670-680 per tonne delivered (equivalent to €655-665 per tonne ex-works), with €700 per tonne the next target for the first quarter.

In general, sentiment in the market was cautiously positive, with restocking and limited supply supporting the uptrend.

Also, in the secondary market, prices for HR sheet have started to pick up recently, to about €720-740 per tonne CPT. But trading remained quite slow, market sources said.

Similarly to Northern Europe, Italian buyers were cautious because of the still-weak demand from end-users.

Import offers were also trending higher recently.

Vietnam-origin coil offers for January shipment were heard at €610 per tonne CFR, while HRC from Egypt, also for January shipment, was offered at €620 per tonne CFR to European ports.

One source reported an offer of January-shipment HRC from Japan at €650 per tonne CFR to Antwerp, but this was not confirmed by other market participants.

And Turkish mills could offer December-shipment coil at €640-650 per tonne CFR, but that did not take into account any anti-dumping duties.

Published by: Julia Bolotova