Tradable levels rise despite low demand in EU HRC market

Tradable ranges inched higher in the European hot-rolled coil market Sept. 6, with costs again central to the rationalization for increasing prices.

Platts assessed hot-rolled coil in Northwest Europe up Eur10/mt on the day, at Eur770/mt ex-works Ruhr.

A mill source reported deals at Eur780-820/mt delivered Ruhr ex-Italy, seeing the North European tradable level at Eur780/mt ex-works Ruhr.

Prices at the higher end of the range were attributed to customers in need of material in the short term, wary of increasing prices, though overall demand remains limited.

Buyers expressed mixed sentiment on tradable ranges and price direction, with both acceptance and resistance to the uptrend heard on the day. Indications from the buy-side were heard in a range of Eur750-800/mt ex-works Ruhr.

“I think all accept that increases are necessary and that current prices are unsustainable,” a trader source said. “It’s tough to see how demand will improve in the next few months. However, prices may increase … I don’t see the quiet market as non-acceptance from buyers so much as a lack of need for material and fear of uncertainties.”

A mill source reported the same, achieving higher prices despite the low-demand market.

“I’ve never seen prices rise on no demand, but it does seem like customers are somewhat accepting … the increase,” a mill source said. “If prices continue to rise, it’s possible demand will come back a little, but it’s hard to see the economic situation improving at the moment.”

Some distributors thought differently, however, with one doubting the survivability of the price increase.

“Prices are always determined by offers and subsequent demand, never by costs,” the source said. “Without a pickup in activity at these price levels, the increase cannot hold.”

In the South European market, the tradable range continued to tighten, with buyers’ indications of achievable prices moving up slightly. Eur760/mt ex-works Italy was now only perceived as workable on large tonnages, with offers at Eur800/mt ex-works seen as increasingly firm on mill exposure to rising energy costs.

“I think these Eur800/mt offers have to be regarded as firm especially given production cuts across the market,” a mill source said. “To relax negotiable prices would be to undermine efforts to establish survivable margins.”

The import market was heard active on the day, with buyers looking to secure volumes at currently available offer levels in anticipation of further increases.

Offers were heard into the Italian market at Eur700-710/mt CIF ex-Far East on the day, with the Platts assessment moving up in kind, to Eur695/mt CIF South Europe.

The Italian domestic HRC assessment was up Eur5/mt on the day, at Eur765/mt ex-works Italy.

Platts is part of S&P Global Commodity Insights.

— Benjamin Steven