Trading on pause in European HRC market due to seasonality, mills hope to achieve higher prices in September

The markets for European steel hot-rolled coil have gone completely quiet because of summer holiday absences, but producers hoped to get higher prices in September on a recovery in consumption, and a lack of low-priced imports due to the rapid take-up of EU import quotas, sources told Fastmarkets on Tuesday August 1.

The seasonal demand slowdown has almost brought trading to a halt in both Northern Europe and Italy.

Fastmarkets’ daily steel HRC index, domestic, exw Northern Europe, was calculated at €650.00 ($715.94) per tonne on August 1, down by €4.92 per tonne from €654.92 per tonne on July 31.

The latest calculation of the Northern European index was down by €6.88 per tonne week on week and by €24.10 per tonne month on month.

As was seen the week before, few suppliers were active in the market.

One German producer was running at reduced rates and therefore had significant delays in order deliveries, with target prices for November-rolling HRC heard at €700 per tonne ex-works – although this was considered unworkable by buyer sources.

In fact, buyers’ estimates of tradeable values were heard at no more than €640-650 per tonne ex-works.

One major integrated producer in the region was heard offering September-delivery HRC at €660 per tonne ex-works.

European mills were optimistic about the post-summer market outlook, expecting apparent steel demand to revive.

“We have not seen any restocking in July, [although] buyers would [normally] come back for volumes,” a mill source said.

Another supportive factor in the European markets was the fast take-up of HRC safeguard quotas in the “other countries” category, which would exclude the most competitive suppliers.

As of July 28, 100% of the total quarterly allocation of 933,743 tonnes in the “other countries” category, for the period from July 1 until September 30, had been taken up, according to EU customs statistics.

Vietnam, Japan, Taiwan and Egypt were the major HRC suppliers to the EU under the “other countries” category, with Asian suppliers offering the most competitive prices, according to EU market sources.

The other HRC suppliers with individual country quotas to the EU are Turkey, India, South Korea, Serbia and the UK.

Among these, Turkey, India, Serbia and the UK have been using their allocations at quite a slow pace, and the prices offered from those countries were quite close to the EU market levels, industry sources said.

Notably, a source in the Benelux area reported an HRC offer from Turkey to Europe at €620-630 per tonne CFR to Antwerp, excluding anti-dumping duty.

At the same time, market sources held little hope of a real consumption rebound in September.

“Construction remains the worst, and automotive the best [performing end-user sectors], but only because the [car industry] is not declining – it remains rather stable,” a distributor in Europe said. “I wouldn’t expect massive price gains [for HRC] in September, but restocking and import issues might allow for a price rise of €15-20 per tonne.”

Fastmarkets calculated its daily steel HRC index, domestic, exw Italy, at €637.50 per tonne on August 1, up by €2.50 per tonne from €635.00 per tonne on July 31.

The Italian index was down by €2.50 per tonne week on week and down by €12.50 per tonne month on month.

Trading in Italy’s market has been described as completely “dead” due to summer closures at key suppliers.

Buyers reported tradeable prices for September-October-delivery HRC at €630-640 per tonne ex-works on August 1, while some producers would hope to achieve €670 per tonne ex-works for such material.

One integrated mill in the country was going to stop one blast furnace for the entire month of August to perform planned maintenance, Fastmarkets heard.

Another integrated producer in Italy has also stopped steelmaking operations for scheduled maintenance and was expected to resume in the week of August 25.

Market sources expected quiet conditions to prevail for most of August due to the summer slowdown.

Import HRC offers were largely flat day-on-day on Tuesday, with no fresh bookings reported.

HRC for shipment in October from Vietnam was said to be available at €580 per tonne CFR to Italy, while one Japanese supplier was offering end-September-shipment HRC at €595-600 per tonne CFR to Italy.

India-origin coil was offered at €600-610 per tonne CFR, but Turkish suppliers were the most expensive, with HRC for September shipment available at €620 per tonne CFR.

Published by: Julia Bolotova