Trading limited in European HRC market, prices edge lower

Minimal trading, oversupply and a lack of end-user demand continued to weigh on steel hot-rolled coil prices in Europe, sources told Fastmarkets on Friday September 22.

HRC buyers in Europe were largely inactive on Friday, postponing restocking activity until October.

Even though the stock levels across the entire supply chain arel ow, buyers remain in no rush to purchase tonnages, principally because of a lack of orders from end-users.

“We don’t need more [HRC] in stock. With current demand levels, we can [easily] survive with what we have,” a stockholder in Germany said.

One producer estimated the tradable price for HRC in Northern Europe at €630-650 ($671-692) per tonne ex-works.

And another mill said it would like to achieve €670 per tonne ex-works for November-rolling HRC, but admitted this was far above the current achievable level.

Buyers, meanwhile, gave lower estimates, with none higher than €620-630 per tonne ex-works.

Lead times for HRC at most EU mills varied between five and six weeks, sources said, adding that European mills might need to cut output during the fourth quarter to balance the market.

Global steelmaker ArcelorMittal announced some equipment stoppages at its mill in Bremen, Germany, earlier this week. It said it would be halting blast furnace (BF) No2 on October 1 for about 30 days, while BF No3 will have a short-term stoppage of five days during the week starting October 9.

ArcelorMittal Bremen’s two BFs have a combined capacity for 3.6 million tonnes per year of pig iron. The Bremen steelworks also produces hot-rolled, cold-rolled and galvanized coil.

Market participants said they expect to see only a limited effect on the flat steel market, because the stoppages were planned, only short term and no equipment apart from the BFs will be stopped.

“To make a difference [to the supply-demand balance for HRC], all European mills would have to adjust production. The market is heavily oversupplied, given the current demand levels,” a trading source said.

Fastmarkets calculated its daily steel hot-rolled coil index domestic, exw Northern Europe, at €629.79 per tonne on September 22, down by €3.96 per tonne from €633.75 per tonne on Thursday.

The index was down by €5.09 per tonne week on week and by €5.21 per tonne month on month.

The calculation of the corresponding daily steel hot-rolled coil index, domestic, exw Italy, was €618.54 per tonne on Friday, down by €3.96 per tonne from €622.50 per tonne on Thursday.

The Italian index was down by €7.46 per tonne week on week and by €8.96 per tonne month on month.

Italian buyers have adopted a wait-and-see attitude, but several sources told Fastmarkets they would come back to the market in the first half of October, when the situation with imports becomes clearer after the renewal of the EU’s quarterly import quotas and material gets cleared through customs.

“Restocking should start after [HRC] imports gain clearance, in about two or three weeks,” a trading source said.

Buyer ideas of the tradable price for HRC in Italy were generally no higher than €600-620 per tonne ex-works.

HRC from Asian countries was said to be on offer at €585-610 per tonne CFR Italy for January-arrival, with the lower end of the range available from Vietnamese suppliers. No new trades were reported on Friday.

Published by: Julia Bolotova