Weak demand drives EU HRC prices down

Domestic prices for hot-rolled coil in Europe declined June 10 due to weak demand from both end-consumers and distributors.

Platts assessed HRC in Northern Europe at Eur940/mt ex-works Ruhr, down Eur10/mt day on day, according to data from S&P Global Commodity Insights.

A trader reported deals at Eur940-950/mt ex-works Ruhr, and a buyer confirmed deals at Eur940/mt ex-works Ruhr.

Two buyers estimated tradable value at Eur950/mt ex-works Ruhr. Another distributor and a producer, however, reported achievable prices at Eur900-950/mt ex-works Ruhr.

Despite high energy costs, Northern European steelmakers were expected to accept prices for HRC at Eur900/mt ex-works or even lower, according to estimates of market participants.

Hot-rolled coil in Southern Europe was assessed at Eur875/mt ex-works Italy June 10, down Eur15/mt day on day.

Offers were heard at Eur900/mt ex-works, and buyers and sellers estimated achievable prices at Eur860-900/mt ex-works. For big tonnages, steelmakers were expected to settle deals at Eur850/mt ex-works.

Low steel consumption by automotive industry has been one of the main reasons behind the downward trend settled in the European market. Production rates of car manufacturers and, as a result, steel consumption has been limited because of shortages of semiconductors and other components. And although some market participants believe that automotive segment might start to recover in the third quarter, a majority of sources agrees that steel consumption rates would reman below average.

“Automotive is dead,” a German trader said. “They did not book as much steel as they intended to earlier this year, and they will not require regular volumes in the third or fourth quarter this year. And even if they had all the components, what would be the demand for cars in current economy and with upcoming changes in emission regulation?”

Distributors have also been showing limited interest in making deals. Due to sufficient stocks and declining prices, they preferred to remain in wait-and-see mode.

“There is a lot of material in the pipeline,” a Northern European distributor said. “Mills have volumes due to disastrous demand from automotive, distributors have volumes due to panic buying and logistics issues that did not allow them to bring material from ports earlier this year. So, market is moving, but it is not moving fast enough to absorb all steel available in stocks.”

Import offers, in the meantime, have stabilized, removing some pressure from the market. This might indicate that domestic prices have moved close to bottom, some market sources suggested.

Import offers of HRC from Asia were heard at Eur870-880/mt CFR Antwerp to Northern Europe.

Turkish mills were heard offering the material to Italy at Eur820-830/mt CFR Italian ports, including anti-dumping duty. Offers of HRC from Asia have been reported at Eur800-820/mt CFR Southern European ports.

HRC from India has been available at Eur780/mt CFR. Despite the competitive price, buyers have been avoiding Indian coil, as the steelmakers had to add boron to avoid export duties, making the material not suitable for welding.

— Maria Tanatar