Trading muted in oversupplied European steel HRC market

European buyers of steel hot-rolled coil were still postponing any restocking amid downbeat price expectations, slow demand and a lack of clarity concerning EU-mandated import quotas for the second quarter, Fastmarkets heard on Thursday March 21.
Trading has been subdued in the European HRC markets since early February. Buyers were only booking small tonnages to cover urgent needs, expecting domestic prices to slip downward in the short run.

Besides, buyers said, they wanted to see how many tonnes of imported coil would be customs-cleared on April 1 under the EU’s safeguard quotas, and what duty rates would be applied.

“We are buying as little [HRC] as we can and waiting for more clarity on import volumes for the second quarter,” a buyer in Germany said.

Market sources expected import quotas for India, South Korea and the “other countries” category – which includes Japan, Taiwan, Vietnam and Egypt – to be exceeded for the second quarter, Fastmarkets heard.

In any case, end-user demand for HRC has remained sluggish, with buyers preferring to keep their stocks low.

“Real demand is very weak,” a second trader said, “because most buyers have sufficient stocks, [and are] dealing with lower demand and strong competition between steel service centers, stockists and traders downstream. [They are also] expecting even lower [HRC] prices because of declining costs for raw materials.”

Offer prices in Northern Europe were reported at €700-710 ($761-772) per tonne ex-works, although market sources said that €680-690 per tonne ex-works would be “negotiable” on a firm bid.

Buyers’ estimates of achievable price for HRC were heard at €670-680 per tonne ex-works.

“Mills are hungry for orders, but at the same time [they are] not prepared to give in to the extremely low prices for now,” a trader in the Benelux area said.

In the Benelux countries, an offer from a re-roller was heard at €660 per tonne delivered.

Producers in the region could mainly offer May lead times.

As a result, Fastmarkets calculated its daily steel HRC index, domestic, exw Northern Europe at €680.63 ($739.93) per tonne on Thursday, down by €2.70 per tonne day on day from €683.33 per tonne.

The index was down by €14.70 per tonne week on week and by €42.50 per tonne month on month.

In Southern Europe, Fastmarkets calculated its corresponding steel HRC index, domestic, exw Italy at €663.50 per tonne on Thursday, down by €1.50 per tonne day on day from €665.00 per tonne.

The index was down by €10.25 per tonne week on week and by €58.44 per tonne month on month.

HRC offers in Italy were mainly heard at €680-690 per tonne delivered, equivalent to €670-680 per tonne ex-works, although some industry sources said that €670 per tonne delivered (€660 per tonne ex-works) was achievable on larger volumes.

Lead times were around six weeks from a local supplier, market sources said.

In the secondary market, 4mm HR sheet was heard traded at prices no higher than €750-770 per tonne CPT, with some steel service centers reported to be offering as low as €740 per tonne CPT. Downstream sales were reported to be very slow.

Offers from Vietnam, South Korea and Taiwan were generally around €580-600 per tonne CFR, but buying interest has remained low, Fastmarkets understands.

Most Asian suppliers were heard offering HRC for shipment in late May, which would mean June-July arrival.

An offer from Saudi Arabia was reported at €570 per tonne CFR for May shipment.

From Turkey, an offer of June-arrival coil was heard at €620 per tonne CFR, including duties.

Published by: Julia Bolotova