Supply disruptions at major producers likely to support European HRC price stabilization

Following disruptions to production and deliveries at key producers, supplies of steel hot-rolled coil in Europe are likely to become tighter, supporting price stabilization in the coming weeks, sources told Fastmarkets on Tuesday June 27.On Monday June 26, authorities ordered the shutdown of steelmaking operations at ArcelorMittal’s Fos-sur-Mer site in southern France, on environmental and worker-safety considerations.

On the same day, German steelmaker Salzgitter declared force majeure on steel deliveries because of disruptions resulting from heavy rain in Germany.

Market sources did not expect there to be any immediate consequences for the HRC market from these developments, but they did suggest that — in the longer run — the disruptions might help to stabilize prices by balancing supply and demand.

“Supply limitations might help the [HRC] market to stabilize. We need to prevent prices falling closer to €600 [$654 per tonne ex-works], and we might now end up at €680 [per tonne ex-works],” a trading source in Germany said.

Trading activity in the Northern European HRC market has been limited recently, even though market sources agreed that prices were close to rock-bottom.

Buyers’ estimates of tradeable values were still being reported in the range of €660-680 ($720-742) per tonne ex-works, while firm offers were rare.

One market source reported the range of offers from the mills in the region to be €680-700 per tonne ex-works, but pointed out that all recent sales have been done at prices lower than €700 per tonne ex-works.

As a result, Fastmarkets’ daily steel HRC index, domestic, exw Northern Europe was calculated at €672 ($732.88) per tonne on June 27, down by just €0.50 per tonne from €672.50 per tonne on June 26.

The latest calculation of the Northern European index was down by €7.75 per tonne week on week and by €78.83 per tonne month on month.

Fastmarkets calculated its corresponding daily steel HRC index, domestic, exw Italy at €645.99 per tonne on Tuesday, down by just €0.26 per tonne from €646.25 per tonne on June 26.

The Italian index was down by €6.01 per tonne week on week and by €42.76 per tonne month on month.

Offers from integrated producers and rerollers in the region were still being heard in the range of €650-670 per tonne ex-works for August-September delivery HRC.

One integrated producer in the south of Italy was reported to be ready to accept a price as low as €620-630 per tonne CPT. But one market source said that such low prices would only be available under pre-payment conditions and for large tonnages.

Trading was also slow in the Italian market, with market sources expecting to see some limited restocking during July, before the seasonal summer closures at mills.

“If the buyers think rock-bottom has been reached, during July we could see some restocking,” a distributor told Fastmarkets.

HRC offers from Asian mills to Italy had been heard around €610-620 per tonne CFR on Monday, mainly for August shipments from Vietnam and Taiwan.

South Korea was reported to be out of the market, and Indian mills had withdrawn their offers, according to market sources.

“After [achieving an] agreement on Section 232 [trade regulations] with the US… Indian mills would be more interested in selling HRC to the US market than to Europe,” a trading source said.

Published by: Julia Bolotova