UK HRC market awaiting certainties before restocking

The UK HRC market was in wait-and-see mode June 24, as high stock levels in the market delayed restocking activity to July.

Some buyers were heard as ready to return to the market, though were reluctant to resume purchasing on uncertainties as to price direction and relevant floors.

A mill source said production cuts would give buyers a degree of reassurance as to price stability, with initial indications of capacity reductions already heard in the European market, such as ArcelorMittal’s idling of blast furnaces in France and Germany. The source predicted further announcements of output cuts in the near-term, effective from mid-July.

Downstream, service centers were reportedly down 30%-50% on day-to-day demand, the mill source added.

Prices for sales from stockholders to end-users were heard to have fallen sharply in recent weeks, a trader source said.

“The simple answer is that current price levels are a correction, though people are a bit concerned it’ll continue to fall below pre-war levels,” said the trader. “Demand is poor everywhere right now. This kind of situation doesn’t have much to do with price specifically – people stop buying until they realize where prices are going.”

Platts assessed hot-rolled coil in the UK June 24 at GBP800/mt DDP West Midlands.

A stockholder source reported mills offering at around GBP800/mt DDP, putting tradable value at the same level. A trader considered tradable value at GBP850/mt DDP UK, though characterized said indication as the high end of the workable price range.

A mill source saw prices as falling below GBP800/mt DDP in the near-term, reinforced by an offer reported by another mill source on the day at GBP730/mt DDP West Midlands. The source said the offer could be a special deal for a larger tonnage or to undercut import offers, doubtful whether that level was representative of market price.

Said doubts were reinforced in circulating the offer to other sources in the market, with one stockholder describing the offer as “far too cheap” and non-sensical against competing mill offers heard much higher at GBP800/mt DDP West Midlands.

— Benjamin Steven, Maria Tanatar