Mixed sentiments on demand and price direction were heard in the European market Aug. 12, as mills chased discounted volumes against patient buyers, desiring certainty before purchasing.
In Northern Europe, tradable value indications were unanimous at Eur750/mt ex-works Ruhr, confirmed by deals reported at said level by multiple producer and distribution sources.
The Southern market moved down sharply, with deals reported at Eur700-720/mt ex-works by a mill source. A distributor source confirmed the Eur720/mt ex-works level.
Mills were heard as hungry for volumes, attempting to sell material “regardless the price,” according to one distributor. Despite attractive pricing, stockholders face a common problem in high inventory levels.
“Prices may be good, but we just don’t have space in our stocks for new material and don’t want to pay extra stocking costs,” the source said.
A trader source was critical of mill aggressiveness in the market, viewing discounted sales as “illogical.”
“Mills are going to have a lot of trouble increasing the prices now that they’ve dragged the market down,” the source said. “Margins are acceptable even as low as Eur700-720/mt, so it seems they’re destocking and generating cash flow rather than trying to get this price trend under control.”
Indeed, a primary factor motivating patient distributor sentiments is the recent volatility in the market, with buyers preferring to wait to see where prices would move before looking to domestic or import restocking, so to avoid devaluation of new steel.
“We prefer to wait and see how the prices will move,” said the trader.
“Buyers show little interest in imports – they want to see where domestic prices are going,” agreed a mill source.
Given the pricing downtrend has continued beyond the Eur850/mt stabilization point seen through July, expectations that market conditions would improve in September – with a consequent rebound in prices – are increasingly pessimistic.
However, a mill source warned against premature negativity.
“Now really isn’t the time to judge the September market,” said the source. “Everyone is on holiday, so there is a lack of clarity – mills are indeed trying to destock and perhaps secure cash flow in some cases, but people tend to make assumptions that the market will be in the same depressed state in September.
“We should be smart about this and wait to see what’ll happen. Real demand remains a question and concern, but it’s too early to pronounce the market dead for the year until we see the state of things in September.”
With deals in the Northern and Southern domestic market at Eur750/mt and Eur720/mt, ex-works Ruhr and Italy, respectively, Platts assessed ex-works HRC in Northern Europe and South Europe at Eur750/mt and Eur720/mt.
Import deals were heard slightly lower in the Northern market at Eur715/mt CIF Antwerp ex-Asia, and in the South European market at Eur670-700/mt CIF Italy ex-Asia and ex-Turkey (duties included).
Multiple buyers reported a lower offer for South Korean material into the Italian market on the day, at Eur650/mt CIF Italy.
— Benjamin Steven, Maria Tanatar