UK hot-rolled coil stockholders limited by uncertainties; tradable levels inch lower

The UK hot-rolled coil market was bearish the week through Nov. 3, with distributors continuing to refrain from restocking on confused price direction and potential further downtrend.

Platts assessed hot-rolled coil in the UK down GBP10/mt Nov. 3 at GBP700/mt DDP West Midlands.

Offers from European mills were heard at GBP680-690/mt DDP West Midlands, as reported by stockholder sources.

Domestic material was available slightly above the GBP700/mt level, at around GBP710/mt DDP UK.

Third country import material was lower at GBP660-670/mt DDP, though buyers continue to avoid said material due to lead times well into next year – too distant to risk devaluation of material on continuing market uncertainties.

Domestic and European mills were heard as able to offer delivery for late December or early January.

Distributors are still burdened by expensive, often delayed material booked earlier this year in the wake of the February-March pricing rally. Stockholder strategies continue to focus on depleting stocks over new purchasing, though some limited demand revival was speculated for December if not late-November.

“Activity levels are ticking over, and stocks are coming down – admittedly not as fast as we’d like,” said a trader source. “Getting rid of old high-priced stock is the name of the game at the moment, though as prices slide lower-priced stock can quickly become higher-priced, relative to spot trade. That said, I could see some booking coming in toward the end of November, but no one can say for sure.”

Stockholders commonly saw uncertain price direction as limiting any potential for substantial purchasing.

“It’s all very scary to be honest and no one has any confidence to book anything,” one said. “We’ve already taken a hit recently on our stock positions.”

Another stockholder agreed.

“We really need to see some positivity,” he said. “Of course, we all want prices to stabilize and rise but let’s not kid ourselves, there needs to be some substance to that before we commit to heavy buying.”

As such, most sources, including producers, expect activity to remain muted for the rest of the year.

Further downstream, end-user demand indications were mixed. Some said enquiries had improved on week, while others saw a slight lull after increased activity in October. A mill source tied reduced activity to the construction sector, structuring purchasing more on long-term contracts as far as April, rather than on the spot market or via shorter term agreements.

Platts is part of S&P Global Commodity Insights.

— Benjamin Steven